Question #30116

4. Given the following production and cost function

Given by Y=15L0.4 K0.5 (Production function)

C=W1L+W2K+100 (Cost Function)

Where L= labor, K= capital,

A) Compute the following

i. APPL (2 points)

ii. APPK (2 points)

iii. MPPL (2 points)

iv. MPPK (2 points)

v. Marginal rate of technical substitution of labour for capital /MRTSLK(2 points)

vi. Expansion path (2 points)

vii. Elasticity of substitution (2 points)

viii. Return to scale (2 points)

ix. Indicate the relationship between elasticity of substitution and scale. (2 points)

Given by Y=15L0.4 K0.5 (Production function)

C=W1L+W2K+100 (Cost Function)

Where L= labor, K= capital,

A) Compute the following

i. APPL (2 points)

ii. APPK (2 points)

iii. MPPL (2 points)

iv. MPPK (2 points)

v. Marginal rate of technical substitution of labour for capital /MRTSLK(2 points)

vi. Expansion path (2 points)

vii. Elasticity of substitution (2 points)

viii. Return to scale (2 points)

ix. Indicate the relationship between elasticity of substitution and scale. (2 points)

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