Given a production function
, if
, and
:
(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  
, if  
, and  
:
(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  
, if  
, and  
:
(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