Answer to Question #275652 in Microeconomics for Steve21

Question

1. What is production

2. What is a production function

3. Define the following terms

(a) Average product (b) marginal product ( c) total product

4. Distinguish between short run and long run

5. Distinguish between increasing returns to scale, constant returns to scale, and

decreasing returns to scale?

6. Determine whether the following functions exhibit increasing returns, constant returns

and decreasing returns to scale and determine the degree of homegeneity

i. Q = 200 𝐾0.4𝐿0.6

ii. Q = 200 + 2K +4L

iii. Q = LK -0.8K2 -0.2L2

Answer 1

1.Production is the process of creating various types of goods and services.

2.The production function is the dependence of production volumes on the quantity and quality of available production factors, expressed using a mathematical model.

3.The total (aggregate) product (Total product, TP) is the total volume of output produced using a certain amount of variable factor of production.

Marginal product (MP) is a value that shows the change in the volume of output as a result of using an additional unit of any factor of production with the same number of others.

Average product (AP) is a value that shows the amount of output per unit of variable factor of production.

4.In economics, a short-term perspective refers to a period during which at least one of the factors of production (in most cases, capital) is fixed.

On the other hand, the long-term perspective reflects a period in which all factors of production are volatile.

5.The return on scale is divided into:

Permanent. It is characterized by an increase in output equal to an increase in the number of incoming factors of production

An increasing one, in which an increase in the factors of production by a certain number of percent leads to an increase in the volume of production by a greater number of percent

Decreasing, in which the increase in production volumes is inferior to the growth of costs invested in production

6.exhibit increasing returns: i

constant returns: ii

decreasing returns: iii