Please classify each the following production functions as increasing returns to scale (IRS), constant returns to scale (CRS), or decreasing returns to scale (DRS). Technique: substitute tK and tL for K and L and check the resulting effect on output (that is, compute q after the inputs double). Remember the rules that (ab)n = anbn, and aman =am+ n. Show your work.
q = L + K0.35L0.65
q = 2 + K0.35L0.65
q = L K
q = L + K
Get Answers For Free
Most questions answered within 1 hours.