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Affect the marginal product of any factor

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Reference no: EM13314682

Production functions

Suppose there are two factors of production: capital (K) and labor (N). Let A be a technological parameter (take it as given)

Answer the following:

1. Does any of the following production functions exhibit constant returns to scale? Justify your answer with a one-line proof

(a) Y = AK0.4 N0.6

(b) Y = AKa Nß, with a+ ß>1

(c) Y = min (K; N)

2. Suppose that the production function is given by Y = C + KaN1-a where C is a positive constant. Does an increase in C affect the marginal product of any factor? Will it affect labor productivity?

Reference no: EM13314682

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