ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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A firm has the production function Q(L, K) = √K + 2√L. The price of one unit of capital is
R> 0, and the price of one unit of labor is W> 0. Which of the following statements is
correct?
The production function can be represented by a CES production function [aL + bKº] for suitable
values of a, b and p.
The production function has increasing returns to scale.
The marginal rate of technical substitution is MRTS (L, K) =
2√L
VR
OfW= R. the fi rm's demand for labor is four times the demand for capital.
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Transcribed Image Text:A firm has the production function Q(L, K) = √K + 2√L. The price of one unit of capital is R> 0, and the price of one unit of labor is W> 0. Which of the following statements is correct? The production function can be represented by a CES production function [aL + bKº] for suitable values of a, b and p. The production function has increasing returns to scale. The marginal rate of technical substitution is MRTS (L, K) = 2√L VR OfW= R. the fi rm's demand for labor is four times the demand for capital.
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