LK 10 3-(a) A firm produces computers with two factors of production: labor L an
ID: 1103209 • Letter: L
Question
LK 10 3-(a) A firm produces computers with two factors of production: labor L and capital K. Its production function is ySuppose the factor prices are wL = 10 and wk = 100 D oes this technology show increasing, constant, or decreasing returns to scale? Increasing returns to scale Constant returns to scale Decreasing returns to scale QUESTION 7 3-(b) What is the long run cost function C(y)? 50 y 100Vy 150Vy 200Vy QUESTION 8 3-(c) If the firm wants to produce one computer, the firm uses The total cost will be units of labor units of capital.Explanation / Answer
3.A. The production function shows increasing returns to scale. As we scale up capital and labour, output more than doubles. The correct answer is A.
3. B. The correct answer is D.
3 C. The firm uses 1 unit of capital and 10 units of labour. The total cost would thus be 100 +100 = 200.
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