Question
Consider the production functionY = K N . a. Compute output when K = 49 and N = 81. b. If both capital and labor
Consider the production functionY = K N .
a. Compute output when K = 49 and N = 81.
b. If both capital and labor double, what happens to output?
c. Is this production function characterized by constantreturns to scale? Explain.
d. Write the production function as a relation between outputper worker and capital per worker.
e. Let K/N = 4. What is Y/N? Now double K/N to 8. DoesY/N double as a result?
f. Does the relation between output per worker and capitalper worker exhibit constant returns to scale?
g. Is your answer to (f) the same as your answer to (c)? Whyor why not?
h. Plot the relation between output per worker and capital perworker. Does it have the same general shape as the relationin the picture below? Explain.
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