Question

The production function Q = 20K0.75L0.25 exhibits A decreasing returns to scale. B constant returns to...

The production function Q = 20K0.75L0.25 exhibits

A decreasing returns to scale.

B constant returns to scale.

C increasing returns to scale.

D increasing, then diminishing returns to scale.

E negative returns to scale.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The production function is as follows -

Q = 20K0.75 L0.25

Output elasticity of capital = 0.75

Output elasticity of labor = 0.25

When the sum of output elasticity of capital and output elasticity of labor is equal to one then the production function exhibits constant return to scale.

When the sum of output elasticity of capital and output elasticity of labor is greater than one then the production function exhibits increasing return to scale.

When the sum of output elasticity of capital and output elasticity of labor is less than one then the production function exhibits decreasing return to scale.

Output elasticity of capital + Output elasticity of labor = 0.75 + 0.25 = 1

In the given case, the sum of output elasticity of capital and output elasticity of labor is equal to one.

Thus,

The production function exhibits constant returns to scale.

Hence, the correct answer is the option (B).

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1) The production function Q = 50K0.25L0.25 exhibits A. increasing returns to scale. B. constant returns...
1) The production function Q = 50K0.25L0.25 exhibits A. increasing returns to scale. B. constant returns to scale. C. decreasing returns to scale. Answer D. increasing, then diminishing returns to scale. E. negative returns to scale. 2) The production function Q = 50K0.25L0.75 exhibits A. increasing, then diminishing returns to scale. B. increasing returns to scale. C. decreasing returns to scale. D. constant returns to scale. Answer E. negative returns to scale. could you please explaing me the reason of...
A? Cobb-Douglas production function A. exhibits constant returns to scale. B. exhibits decreasing returns to scale....
A? Cobb-Douglas production function A. exhibits constant returns to scale. B. exhibits decreasing returns to scale. C. exhibits increasing returns to scale. D. can exhibit? constant, increasing, or decreasing returns to scale.
Production function, Q = 10L + 5K0.9+10L0.5K0.4 is subject to: a) increasing returns to scale. b)...
Production function, Q = 10L + 5K0.9+10L0.5K0.4 is subject to: a) increasing returns to scale. b) decreasing returns to scale. c) constant returns to scale. d) economies of scope. e) diseconomies of scope.
For each of the following production functions, determine whether it exhibits increasing, constant or decreasing returns...
For each of the following production functions, determine whether it exhibits increasing, constant or decreasing returns to scale: a) Q = K + L b) Q = L + L/K c) Q = Min(2K,2L) d) Q = (L.5 )(K.5)
Does the Production Function Q = min(K,4L) have increasing, constant or decreasing returns to scale?
Does the Production Function Q = min(K,4L) have increasing, constant or decreasing returns to scale?
Does the Production Function Q = 6K + 3L have increasing, constant or decreasing returns to...
Does the Production Function Q = 6K + 3L have increasing, constant or decreasing returns to scale?
For each of the following production functions, determine if the technology exhibits increasing, decreasing, or constant...
For each of the following production functions, determine if the technology exhibits increasing, decreasing, or constant returns to scale. a. ??(??,??)=2??+?? b. ??(??, ??) = √?? + √?? c. ??(??, ??) = ???? + ??2 + ??2 d. ??(??, ??) = √????
Determine whether the following production functions exhibit increasing, decreasing or constant returns to scale. a. Q...
Determine whether the following production functions exhibit increasing, decreasing or constant returns to scale. a. Q = L + K b. Q = 10KL c. Q = L + K1/2L 1/2 + K d. Q = 10K1/4L 1/4
2. A firm has the following linear production function: q = 5L + 2K a. Does...
2. A firm has the following linear production function: q = 5L + 2K a. Does this firm’s production function exhibit diminishing returns to labor?    b. Does this production function exhibit diminishing returns to capital? c. Graph the isoquant associated with q = 20. d. What is the firm’s MRTS between K and L? e. Does this production technology exhibit decreasing, constant, or increasing returns to scale?
1. Show whether the following production functions exhibit decreasing returns to scale (DRS), constant returns to...
1. Show whether the following production functions exhibit decreasing returns to scale (DRS), constant returns to scale (CRS), or increasing returns to scale (IRS)? a. q = 10L^0.6 K^0.5 b. q = L + K c. q = L^0.6 + K^0.5
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT