Why production function exhibits external returns to scale

Reference no: EM133270603

Assignment:

Suppose that production of a unit of good X in a location requires 10 5+?????? units of labor and ?????? units of electric power, where ???? is total output of industry X in that location and b>0.

a) Explain why this production function exhibits external returns to scale and will tend to lead to clustering of production.

b) Suppose that cheaper power becomes available in another location. What will determine whether some firms choose to leave for the cheaper power location? Explain?

Reference no: EM133270603

Questions Cloud

Explain how it applications can be made to be cost-effective : explain how IT applications can be made to be cost-effective within the framework and environment of business activities.

How will affect total revenue of wood received by producers : How will this affect the total revenue of wood received by producers if the demand for wood is price-inelastic?

Compare and contrast the hierarchy of the feudal system : Compare and contrast the hierarchy of the feudal system with that of the monastery. Why were each of these structures implemented? How did pilgrimage affect

Describe the service experience and setting : Describe the service experience and setting - Recommend improvements / application to another service

Why production function exhibits external returns to scale : Explain why this production function exhibits external returns to scale and will tend to lead to clustering of production.

Identify and explain the second criterion attention : Identify and explain the second Criterion "Attention" for IMC programs AND its challenges the Spotify management face in successfully implementing

Overview of procedural safeguards and parental rights : An overview of procedural safeguards and parental rights. A minimum of three local or national resources to support families who have children with disabilities

What advertisement appeal do feel each example is usingc) : MRK 317 Seneca College what advertisement appeal do feel each example is usingc) why think they are using this appeal for each exampled) how do the ads relate

What should be the objectives of marketing communications : what should be the objective(s) of Marketing Communications of FTU2 TNE programs in the upcoming steps of the brand's developmen

User Account

All Pages