Lecture 6 Questions

Now that you’ve studied lecture 6, please answer the following questions and send your answers to me by the end of business on the 12^th May.

Questions

1. Distinguish between the term economies of size and the term economies of scale.

2. If a production function is homogeneous of degree 1, what happens to output when all inputs are tripled?

3. What happens to output when all inputs are doubled if the production function is homogeneous of degree 0.9?

4. Assume that Euler’s theorem is used to reward or pay factors of production. What happens when the production function is homogeneous of degree:

   1. 1.9?
   2. 1.0?
   3. 0.2?
       

5. Answer the following questions by true or false and explain if false. In a Cobb Douglas production function

   1. the MPP of each input is given by its coefficient
   2. the MPP of each input is declining
   3. the elasticity of substitution between two inputs is equal to one at all points along the isquant
   4. each input earns a constant ammount regardless of its price
   5. the inputs are compliments to one another
   6. constant returns to scale is assumed.