Economics Question (Answer all parts Question 3-6) Please show work QUESTION 3 1

Question

Economics Question (Answer all parts Question 3-6) Please show work

QUESTION 3 10 points Save Answer Dscarmine the roturns to scalo ot the tallowing production tunction Y K+L O incressing cofetant O decreasing 0 cannat be ceteemined QUESTION 10 paints Save Answor Determine the returns to scale of this producton tuoton: Y-K0.3L0.7 Incroaaing Docroasirg Constant 10 pointa Save Answer Coraidor tho produetion tunctionY3 What will be the share ot labor income in total incomo? 0 23 Carnot be determined QUESTION 15 paints Save Anawer Ooreider the production furiction KusL2/3 Suppase he supy f capal s8 and the sppy ef labor is 27. Then B Capa icome wieqa Save Al Answar Coae Wndoe

Explanation / Answer

) Y=F(K,L)=8K+L

F(tk,tL)=8tK+tL=t(8K+L)=tF(k,L)=tY

Thus since when inputs are raised by a factor t so output also get raised by factor t, This production function exhibits constant returns to scale

2) Y=F(K,L)=K^(0.3)*L^(0.7)

F(tk,tL)=(tK)^(0.3)*(tL)^(0.7)=t^(0.3)*t^(0.7)*K^(0.3)*L^(0.7)=t*K^(0.3)*L^(0.7)=t*F(tk,tL)=tY

Thus since when inputs are raised by a factor t so output also get raised by factor t, This production function exhibits constant returns to scale

3) For a cobb douglas production function Y=K^(1/3)*L^(2/3), the share of labor's income is equal to the power index of L in the production function. Thus share of labor income in this case is 2/3.

4) Given production function Y=K^(1/3)*L^(2/3), K=8 and L=27

Thus Y=8^1/3*27^2/3=2*9=18

Capital income=(1/3)*18=6

Labor income=(2/3)*18=12

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.