WebExample: If the production function is CRS and profits are positivey At first sight this may seem surprising but there are some reasons why this is intuitive: 1) As a firm grows it is likely to fall into DRS, 2) price-taking behavior becomes unrealistic and 3) other firms have incentives to imitate the first one http://web.mit.edu/course/14/14.02/www/F02/ps6_answers.pdf

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WebWhile discussing the production theory of the firm, economists C. W. Cobb and P. H. Douglas used a special form of production function, which is known as the Cobb-Douglas Production Function. Cobb-Douglas (C-D) production function is of the form Q = ALαKβ (8.100) where L = quantity used of labour K = quantity used of capital Q = quantity of … WebThe CMS (constant marginal. 1. Let y=f (X1,X2) be a constant return-to scale production function. Show that if the average product of X1 is rising, the marginal product of X2 is negative. 2. Prove that when the production function is homogeneous of degree one, it may be written as the sum f (x)=Σi=1 MPi (X)Xi,where MPi (X) is the marginal ... government stat redundancy calculator

Solved 1. Let y=f(X1,X2) be a constant return-to scale - Chegg

WebQuestion: CRS Production Function - Intensive Form Let Y = F (K, L) be a Constant Returns to Scale (CRS) production function, where Y is the output and K, L are inputs … WebBut, with CRS technology, i.e. f(z) = kz, there will be at least one P equilibrium (more if utility function is not strictly quasi-concave) which is Pareto optimal. It is obtained by setting w= 1 k, because with CRS any x 1 2[0;L] is a maximizer. (e) Now, suppose that in recognition of such great management innovation, WebJan 24, 2024 · Calculation. Marginal product of capital of an economy which is represented by the Cobb-Douglas production function can be calculated using the following formula: MPK A K 1 L 1 Y K. The … government stationery office uk