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    Analyzing Returns to Scale of the Production Function

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    Consider the production function Q=100L^.5K^.4. Suppose L=1 and K=1 so that Q=100

    a. If L is increased by 1 percent, that is to L=1.01 with capital unchanged, what is the resulting percentage increase in output?

    b. Describe the nature of returns to scale for this production function.

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    https://brainmass.com/economics/production/analyzing-returns-to-scale-of-the-production-function-434073

    Solution Preview

    a. If L is increased by 1 percent, that is to L=1.01 with capital unchanged, what is the resulting percentage increase in output?

    Output level for L=1 and K=1 is
    Q=100*1^0.5*1^0.4=100 units

    Output level for L=1.01 and K=1 ...

    Solution Summary

    Solution discusses the nature of returns to scale for the given production functions along with step-by-step calculations.

    $2.19

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