Duane breeds parrots for a living, and has the following production function for

Question

Duane breeds parrots for a living, and has the following production function for a parrot chicks:

q = F(L,K) = 2L1/2K1/2

Where L denotes parrot food and K denotes capital

A. In the short run Duane's level of capital is fixed at 16 units. How much labor should Duane employ to produce 24 parrot chicks?

B. Does Duane's production function exhibit constant, increasing, or decreasing returns to scale in the long run when both inputs are variable?

Explanation / Answer

a> q = F(L,K) = 2L1/2K1/2 24=2K^(1/2)*(16^(1/2) or 24=2K^(1/2)*4 or k^(1/2)=24/8=3 or K=3*3=9 b>It shows decreasing returns to scale as the function contains square roots of K and L.

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