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Questions › DSE › DSE 2014 › Q36
2 marks, −0.666666666666667Microeconomics › Production and returns to scale › Production possibilities and opportunity costHardabout 3 min

DSE 2014 Question 36: Production and returns to scale

An economy has endowments of KKK units of capital and LLL units of labour. Two goods can be produced by X1=klX_1=\sqrt{kl}X1​=kl​ and X2=lX_2=\sqrt{l}X2​=l​, where kkk is capital and lll is labour used. Find the production possibility frontier.

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An economy has endowments of K units of capital and L units of labour. Two goods can be produced by X₁=√kl and X₂=√l, where k is capital and l is labour used. Find the production possibility frontier. (A) X₁²+KX₂²=KL (B) X₁²+X₂²=KL (C) X₁+√KX₂=√KL (D) X₁+X₂²=KL

Also written as: An economy has endowments of K units of capital and L units of labour. Two goods can be produced by X_1=sqrt(kl) and X_2=sqrt(l), where k is capital and l is labour used. Find the production possibility frontier.

Production and returns to scale has come up 92 times in 6 exams since 2007.

What this question tests

This question is on Production possibilities and opportunity cost, part of Production and returns to scale in Microeconomics.

The frontier of feasible outputs, opportunity cost, and what shifts the frontier, including technological change.

TestStop has 18 past-paper questions on this subtopic.

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Question from the DSE 2014 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.