Consider the production function Q=100L^.5K^.4. Suppose L=1 and K=1 so that Q=100.
If L is increased 1 percent, that is to L=1.01 with the capital unchanged, what is the resulting percentage increase in output?
Describe the nature of returns of scale for this production function.© BrainMass Inc. brainmass.com October 10, 2019, 12:15 am ad1c9bdddf
Q=100L^0.5K^0.4 L=1, K=1 Q=1
Now if L=1.01
we have Q=100*1.01^0.5*1^0.4=100.499
To check return ...
The nature of returns of scale is explicated.