14.01 Fall 2010 Problem Set 4 Solutions
Checking for returns to scale (we are scaling MP K 3LK 2. 3L. up all inputs for a factor t > 1): F (tK, tL) = tL(tK) 3 = t. 4. LK. 3 = t. 4 · F (K, L) So, this production function exhibits increasing returns to scale. (b) F (L, K) = L + 3K This is the perfect substitutes production …
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