Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 3, Problem 3PA
To determine
Whether the production function is exhibiting decreasing or increasing returns to scale.
Expert Solution & Answer
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The production function feature called
"increasing returns to scale" means that
if we increase capital and labor by 10
percent each, we increase output by 20
percent.
True or False?
Country A and Country B both have the production function:
Y = F(K,L) = K^(1/3)L^(2/3).
a) Does this production function have constant returms to scale? Explain.
Question 19 Consider the following graph of a production function when capital is constant. (The following is a description of the figure: it shows a two-axis graph; the horizontal axis measures labor and the vertical axis measures output; for a K fixed, the graph shows that maximal production that the firm can achieve with different levels of labor; the graph starts at cero production for zero labor; then it is increasing in all of its range; three levels of labor are shown as reference; there are L1, L2, and L3; they are related as follows L1<L2<L3; the graph is convex from 0 to L1, that is, its slope is increasing; the graph is concave from L1 on, that is, its slope is decreasing; the line that is tangent to the curve at L2, passes through the origin of the graph.)
From the graph we know that for the corresponding K:
MPL(L2,K)=MPL(L3,K)
MPL(L1,K)>MPL(L2,K)
MPL(L1,K)=MPL(L2,K)
MPL(L1,K)<MPL(L2,K)
MPL(L3,K)>MPL(L2,K)
Chapter 3 Solutions
Macroeconomics
Ch. 3 - Prob. 1QQCh. 3 - Prob. 2QQCh. 3 - Prob. 3QQCh. 3 - Prob. 4QQCh. 3 - Prob. 5QQCh. 3 - Prob. 6QQCh. 3 - Prob. 1QRCh. 3 - Prob. 2QRCh. 3 - Prob. 3QRCh. 3 - Prob. 4QR
Ch. 3 - Prob. 5QRCh. 3 - Prob. 6QRCh. 3 - Prob. 7QRCh. 3 - Prob. 8QRCh. 3 - Prob. 1PACh. 3 - Prob. 2PACh. 3 - Prob. 3PACh. 3 - Prob. 4PACh. 3 - Prob. 5PACh. 3 - Prob. 6PACh. 3 - Prob. 7PACh. 3 - Prob. 8PACh. 3 - Prob. 9PACh. 3 - Prob. 10PACh. 3 - Prob. 11PACh. 3 - Prob. 12PACh. 3 - Prob. 13PACh. 3 - Prob. 14PA
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