Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please solve on paper so I can follow the step and learn it 5. Given the demand function Q=10-3P + 2P, +0.2Y , where O

image text in transcribed

Please solve on paper so I can follow the step and learn it

image text in transcribed
5. Given the demand function Q=10-3P + 2P, +0.2Y , where O is the quantity demanded, P is the price of the good, PA is the price of an alternative good A and Y is income, find (i) the own price elasticity of demand the cross price elasticity of demand (iii) the income elasticity of demand at P =5, PA = 3 and Y =150. Comment on the economic significance of your answers. 6. For each of the following production functions: (i) find the marginal product of Labour L and of Capital K (ii) comment on the returns to K and the returns to L (hint: you need to check the second partial derivatives to examine the returns to an input) (iii) show that the function is homogenous and state the degree of homogeneity (iv) identify whether the function exhibits increasing, decreasing or constant returns to scale a) Q= K1/3 L1/3 b) Q =K2/3 L C) Q = KL 7. If the production function is given by Y = AKLB, what values do the numbers a and B need to take if this production function is to have (a) diminishing returns to K (b) diminishing returns to L (c) constant returns to scale and (d) diminishing returns to scale

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Advanced Macroeconomic Theory

Authors: Ola Olsson ]

1st Edition

9780415685085

More Books

Students also viewed these Economics questions

Question

What reward will you give yourself when you achieve this?

Answered: 1 week ago