What is the firms efficient scale of production

Reference no: EM13183075

Assume a firm has the following production function: $F(K,L)=L+\sqrt{1+K}$ where L and K represent the inputs for Labor and Capital.

a) Show a derivation for the $MRTS_{LK}$

b) Does this production function have a declining $MRTS_{LK}$ ? Be sure to show your work.

c) Does this production function have an increasing, decreasing, or constant return on sales?

d) Which input bundle represents efficient production of 100 units of output if the rental paid to capital is $25 and he wage paid to labor is $50? Round any decimals to the nearest hundredth.

e) Derive the firm's cost function using the rental and wage listed in Part D

f) Does this firm exhibit economies or diseconomies of scale?

g) What is the firm's efficient scale of production?

Reference no: EM13183075

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