Question
A company has developed the production function of Q=80L.5 K0.6 where L represents labor and K represents Capital.
a. If L is increased by 2% with K unchanged, what is the resulting percentage change in output?
b. Describe the nature of returns to scale for this production function.
a. If L is increased by 2% with K unchanged, what is the resulting percentage change in output?
b. Describe the nature of returns to scale for this production function.