The table below shows various values of labour (L),capital (K),and technology (T)for Economies A,B,and C.In each case,the aggregate production function takes the following form:
Y = T × TABLE 25-4
-Refer to Table 25-4.The production function that applies to Economies A,B,and C displays

Question

The table below shows various values of labour (L),capital (K),and technology (T)for Economies A,B,and C.In each case,the aggregate production function takes the following form:
Y = T ×   TABLE 25-4
-Refer to Table 25-4.The production function that applies to Economies A,B,and C displays

Quizplus · Accepted Answer

The production function in the three economies has the form Y=T*K^(1/2)*L^(1/2), which implies that increasing capital within each economy will lead to diminishing marginal returns. However, it is not possible to determine the overall returns to scale without knowing the scale of the economies. Therefore, both options C and D are correct.

The Table Below Shows Various Values of Labour (L),capital (K),and