Posted: December 19th, 2022
Q2. Text – B & B, 5th ed. Problem #6.24
Consider a CES production function given by Q = (K0.5 + L0.5)2.
a) Does this production function exhibit increasing, decreasing, or constant returns to scale?
b) Suppose that the production function took the form Q = (100 + K0.5 + L0.5)2. Does this production
function exhibit increasing, decreasing, or constant returns to scale?
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