2. (Production Function) Suppose you have a production function: Y = 10K¹/21¹/2 K represents the units of capital employed at production. L is the number of labor hours (a) Prove what are the returns of scale for this production function? (b) Which input is more productive? (Capital, Labor, or indifferent) Why? (c) What is MPK and MPL? Can you draw graphs? (d) What is "per person" version of production function? (y=Y/L, k=K/L)

1. Of the major costs of a typical family, which do you think differ most by geography and account for these purchasing power differences?  (e.g. home prices/rents much higher in certain states (California, New York) compared to others (Mississippi))

1. Definition of economic costs Shen lives in San Diego and operates a small company selling drones. On average, he receives $727,000 per year from selling drones. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $427,000. He also pays several utility companies, as well as his employees wages totaling $254,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $31,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Shen does not operate the drone business, he can work as a blogger and earn a yearly salary of $26,000 with no additional monetary costs, and rent out his storefront at the $31,000 per year rate. There are no other costs faced by Shen in running this drone company. Identify each of Shen's costs in the following table as either an implicit cost or an explicit cost of selling drones. Implicit Cost Explicit Cost The wholesale cost for…

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1. Explain the difference between explicit costs and implicit costs. 2. Explain the difference between economic profit and accounting profit.  3. What are the 2 variables that the Production Function is analyzing/graphing? Why does the production function diminish over time?  4. Give an example of a fixed cost and a variable cost. 5. How does fixed costs and variable cost change with increased production? 6. Why does Marginal Cost rise? 7. Why is the Average Total Cost curve U shaped? 8. Why is the Minimum Average Total Cost and Efficient Scale important? 9. What is the relationship between Marginal Cost and Average Total Cost? 10. Explain why economies of scale is important.

(Table: Production Function for Quinoa) Use Table: Production Function for Quinoa. Assume that the fixed input consists of 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The total cost of producing 75 bushels of quinoa is: Table: Production Function for Quinoa Number of Workers Bushels of Quinoa 10 1 2 3 4 5 transcript O $7,650. O $1,225. O $650. O $1,150. 10 25 45 60 70 75

Which of the following statements are TRUE? (a) (b) Capital (K) 20 16- 12 8- 4 T T 4 8 10 12 16 20 24 28 I and III I and IV 9 = 20 III and IV 9 = 50 O II and III Labor (L) Capital (K) 20 16- 12 8 6 4 9 = 35 I. Panel (a) illustrates constant returns to scale II. Panel (b) illustrates decreasing returns to scale III. Panel (a) illustrates increasing returns to scale IV. Panel (b) illustrates constant returns to scale 9 = 70 T T T T 4 8 10 12 16 20 24 28 Labor (L)