Consider the production function q = f(L,K) = ALªK®, where A, a, b are positive constants. For what values of A, a, and b are there diminishing marginal returns to labor L? What about diminishing marginal returns to capital? b. For what values of A, a, and b does the production process have diminishing marginal rate of technical a. substitution? c. For what values of A, a, and b are there constant/decreasing/increasing returns to scale?
Consider the production function q = f(L,K) = ALªK®, where A, a, b are positive constants. For what values of A, a, and b are there diminishing marginal returns to labor L? What about diminishing marginal returns to capital? b. For what values of A, a, and b does the production process have diminishing marginal rate of technical a. substitution? c. For what values of A, a, and b are there constant/decreasing/increasing returns to scale?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:2) Consider the production function q = f(L, K) = ALªK®, where A, a, b are positive constants.
For what values of A, a, and b are there diminishing marginal returns to labor L? What about diminishing
marginal returns to capital?
b. For what values of A, a, and b does the production process have diminishing marginal rate of technical
а.
substitution?
с.
For what values of A, a, and b are there constant/decreasing/increasing returns to scale?
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