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Author Question: Cobb-Douglas production functions can never possess varying returns to scale. Indicate whether ... (Read 36 times)

BrownTown3

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on: Jul 1, 2018
Cobb-Douglas production functions can never possess varying returns to scale.
 
  Indicate whether the statement is true or false

Question 2

A firm is currently producing 100 widgets using 4 units of labor and 12 units of capital. The firm's production function exhibits constant returns to scale. How many units of labor and capital are needed to produce 350 widgets?
 
  A) L = 14; K = 42
  B) L = 15; K = 45
  C) L = 14; K = 44
  D) L = 15; K = 42
Microeconomics ¦ Perloff ¦ 8th Edition
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covalentbond

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Reply #1 on: Jul 1, 2018
Answer to Question 1

True . The Cobb-Douglas function takes the form q = L K, where the exponents are constant parameters. The returns to scale equals  +  which is constant for all q.

Answer to Question 2

A


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