Explan the increasing returns to scale as a basis for international trade. Be sure that you define the relevant concepts, describe important features of such trade, and contrast these features with those of trade due to other causes.

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Explain the increasing returns to scale as a basis for international trade. Be sure that you define the relevant concepts, describe important features of such trade, and contrast these features with those of trade due to other causes.

While international trade has been present throughout much of history, its economic, social, and political importance have been on the rise in recent centuries, mainly because of industrialization, advanced transportation, globalization, multinational corporations, and outsourcing.

Let us discuss the concept of increasing returns to scale.
Increasing returns to scale leads to decreasing marginal opportunity cost Average and Marginal cost decreases as output increases in the long run. Economists usually explain "increasing returns to scale" by indivisibility. For example some methods of production can only work on a large scale -- either because they require large-scale machinery, they require a great deal of division of labor. Since these large-scale methods cannot be divided up to produce small amounts of output, it is necessary to use less productive methods to produce the smaller amounts. Thus, costs increase less than in proportion to output -- and average costs decline as output increases. Positive changes in average and marginal productivity reduce the cost of production. This is because of improvement in the marginal productivity and average productivity leads to economies of scale which helps in the cost reduction. On the other hand the "law" of diminishing marginal returns says that after a possible initial increase in marginal returns, the Marginal product of an input will fall as the total amount of the input rises (holding all other inputs constant). Thus diminishing marginal returns imply increase in marginal cost. This is shown in the downward sloping part of MPL curve. This is often explained as due to congestion. For example, consider a wheat farm: as the farm employs more and more workers, the farm will start ...

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This explains the increasing returns to scale as a basis for international trade

#2) Following are different algebraic expressions of the production function. Decide whether each one has constant, increasing, or decreasing returns to scale.
a. Q = 75L0.25 K0.75
b. Q = 75A0.15 B0.40 C0.45
c. Q = 75L0.60 K0.70
d. Q = 100+50L+50K
e. Q = 50L+50K+50LK
f. Q = 50L2 + 50K2
g. Based on the answers for the

Hi,
I am fairly new to economics with only a basic understand of the topic and because of this I am struggling to answer (and understand the explanation for the answer) a question about the Cobb Douglas production function.
Q. Under what conditions does a Cobb-Douglas production function (q=AL^(alpha)K^(beta)) exhibit decr

1. A company produces table and chairs with the following total cost function TC=10,000+10Q+0.1Q2 in which Q=quantity of chairs produced. If the company can sell as many chairs it wishes at the current market price of $45, how many chairs should it produce to maximize its short-run profits?
2. A production with the form Q=15

Please refer attached file for better clarity of table.
Does the Production Function of Table (below) show constant, increasing or decreasing returns to scale if the firm increases the quantity of labor and capital used from
(a) 2L and 2K to 4L and 4K?
(b) 2L and 4K to 3L and 6K?
Explain work.
Capital (K) 6

Consider a production function of the form F(K,L)=(K^(-a)+L^(-a))^(-1/a).
(a) Is this function homogeneous?
(b) Does it display increasing, constant or decreasing returns to scale?
(c) Let G be a differentiable function. Find an expression for G(K+g,L+h) by taking a first-order Taylor expansion of G about (K,L).
(d)

Microeconomics Exercises
1. You might think that when a production function has a diminishing marginal rate of technical substitution of labour for capital, it cannot have increasing marginal products of capital and labour. Show that this is not true, using the production function Q = K2L2
2. A firm produces a quantity Q

2. Assume the Production Function for Hamburgers is Q = 4L^.50K.^33. where Q is the quantity of hamburgers, L is the number of workers employed and K is number of grills.
a. What is the quantity of hamburgers produced when the company employs 64 workers & 36 machines?
b. Continue to assume the input mix given aboveâ€”

According to the chief engineer at the Zodiac Company, Q=AL^a K^b, where Q is the output rate, L is the rate of labor input, and K is the rate of capital input. Statistical analysis indicates that a=0.8 and b=0.3. The firm's owner claims the plant has increasingreturns to scale.
A) Is the owner correct?
B) If b were 0.2 r

The law of diminishing marginal returns states that
a. the marginal product of labor declines as all inputs are increased.
b. production functions exhibit decreasing returns to scale.
c. the marginal product of labor returns as more capital is used.
d. the marginal product of a factor eventually diminishes as more of the i