Chapter 6

dividing q by q. This gives us q /q L/(L/2) 2. Therefore when the amount of labor is doubled, output is also doubled. Hence there are constant returns to scale. b. q 2L2 L. Again, let q be output when labor is doubled. q (2L) 2L 4L2 2L. Dividing by q 2yields q /q 2 (4L 2L)/(L L) 2. To see why this ratio is greater than two, note that it would

Tags:

  Dividing

Information