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Economics 360: Microeconomic Theory Spring, 2014 Problem Set #4




Question;Economics;360: Microeconomic Theory;Spring, 2014. Assigned;Mar 27. Due Thurs Apr 3 in lecture.;Problem Set #4;5.;Consider this production function: f(K,L) = min(2K.5, 3L.5);a.;What are the returns to scale of this;production function? Explain.;b. What;is the optimal ratio of capital to labor, as a function of input prices r;and w? What other type of production function is this one most similar;to?Explain.;6.;Consider this production function: f(K,L) = 10 K.4 L.4;a.;What are the returns to scale;of this production function?;b.;What are the optimal quantities of K and L;as a function of input prices r, w, and the output price p?;c.;What is the cost function;which corresponds to this production function, when r=1 and w=2?;2


Paper#55736 | Written in 18-Jul-2015

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