Question

Consider a production function Y=zF(K,N^d)

Which of the following properties we assume for F?

1. Constant returns to scale.

2. Output increases with increases in either the labor input or the capital input

3. The marginal product of labor decreases as the labor input increases.

4. The marginal product of capital decreases as the capital input increases.

5. The marginal product of labor increases as the quantity of the capital input increases.

A) 1,2,3,4 and 5

B) 1,2,3 and 4

C) 1,2,3

D) 1 and 2

Answer 1

F(. , . ) represents the function including the inputs required in production . . It has the following properties : more inputs leads to more outpur ( positive marginal product ) , law of diminishing marginal product , constant returns to scale .

Answer : 1. Constant returns to scale. 2. Output increases with increases in either the labor input or the capital input . 3. The marginal product of labor decreases as the labor input increases. 4. The marginal product of capital decreases as the capital input increases.

B) 1,2,3 and 4