. The Production Function

Assume a production function of the form:

Y = 10 (K^. 5)( L^.5)

a.

Does this production function exhibit constant returns to scale? Explain.

b.

Suppose K=200, L = 400. What is the value of Y?

c.

Calculate the MPL.

d.

Calculate the MPK

e.

Suppose the US experiences mass immigration, resulting in an increase in L to

500. What is the effect on the real wage and the rental price of capital?

Show your calculation.