What is a production function?
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A firm's production function is Q = 5L2/3K1/3.
a) Does this production function exhibit constant, increasing, or decreasing returns to scale and why?
b) What is the marginal rate of technical substitution of L for K for this production function?
c) What is the elasticity of substitution for this production function?
1. What is a production function? Write an equation for a typical production function, and explain what each of the terms represents.
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1. Assume that a country's production function is Y = K1/2L1/2.
a. What is the per-worker production function y = f(k)?
Assume that the country possesses 40,000 units of capital and 10,000 units of labor. What is Y? What is labor productivity computed from the per-worker production function? Is this value the same as labor productivity computed from the original production function?
Assume that 10 percent of capital depreciates each year. What gross saving rate is necessary to make the given capital