Suppose a producer has a fixed coefficient technology , where is output and and are the inputs. At equilibrium
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1 markMicroeconomicsProduction and returns to scaleProduction functions and the elasticity of substitutionModerateabout 2 min
DSE 2007 Question 3: Production and returns to scale
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Suppose a producer has a fixed coefficient technology Q=min (2K,3L), where Q is output and K and L are the inputs. At equilibrium (A) K=L (B) K=(3/2)L (C) K=(2/3)L (D) K and L are indeterminate
Production and returns to scale has come up 92 times in 6 exams since 2007.
What this question tests
This question is on Production functions and the elasticity of substitution, part of Production and returns to scale in Microeconomics.
Cobb-Douglas, CES and fixed-proportions technologies, and how easily inputs substitute.
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