Given a production function $Y _ { t } = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$ , if $\bar { A } = 2 , \bar { L } = 4 , \bar { s } = 0.2$ , and $\bar { d } = 0.05$ :
(a) Calculate the steady-state level of capital and output.
(b) Does the above production function exhibit constant returns to scale, or does it exhibit diminishing marginal returns? Explain, and define the difference between these two concepts.

Question

Given a production function $Y _ { t } = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$  , if $\bar { A } = 2 , \bar { L } = 4 , \bar { s } = 0.2$  , and $\bar { d } = 0.05$  :
(a) Calculate the steady-state level of capital and output.
(b) Does the above production function exhibit constant returns to scale, or does it exhibit diminishing marginal returns? Explain, and define the difference between these two concepts.

Quizplus · Accepted Answer

The Answer of Given a production function $Y _ { t } = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$  , if $\bar { A } = 2 , \bar { L } = 4 , \bar { s } = 0.2$  , and $\bar { d } = 0.05$  :
(a) Calculate the steady-state level of capital and output.
(b) Does the above production function exhibit constant returns to scale, or does it exhibit diminishing marginal returns? Explain, and define the difference between these two concepts.

Given a Production Function Yt=AˉKt1/3Lˉ2/3Y _ { t } = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }Yt​=AˉKt1/3​Lˉ2/3

Given a Production Function $Y _ { t } = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$