Project Description: In this problem, you will investigate the return to scale of different production functions. Steps to Perform:
Step Instructions Points Possible
1 Use a cell reference or a single formula where appropriate
in order to receive full credit. Do not copy and paste values,
as you will not receive full credit for your answers. 0
Start Excel. 0
2 In cell E7, by using relative and absolute cell references,
calculate the value of production function q1 if the value of labor
is in cell C7 and the value of capital is in cell D7. Copy the formula
from cell E7 down the column to cell E9. 1
3 In cell F7, by using relative and absolute cell references, calculate
the value of production function q2 if the value of labor is in cell C7
and the value of capital is in cell D7. Copy the formula from cell F7
down the column to cell F9. 1
4 In cell G7, by using relative and absolute cell references, calculate
the value of production function q3 if the value of labor is in cell C7
and the value of capital is in cell D7. Copy the formula from cell G7
down the column to cell G9. 1
5 In cell G12, determine the return to scale of the production function
q1. 1
6 In cell G13, determine the return to scale of the production function
q2. 1
7 In cell G14, determine the return to scale of the production function
q3. 1
8 Save the workbook. Close the workbook and then exit Excel. Submit the workbook as directed.
Use a cell reference or a single formula where appropriate in order to receive full credit.
Labor, L, and capital, K, are the only inputs in each of the following production functions below. For each production function, find the output associated with the following output combinations: L=2, K=2, L=4, K=4; and L=8, K=8
a. q1 - (L + K)2
b.42 - (sqrt(L) + sqrt(K))2
c. q3 = (20 + sqrt(L) + sqrt(K))2
L K q1 q2 q3
2 2
4 4
8 8
Determine the return to scale of each production function.
The production function ql exhibitsreturns to scale.
The production function q2 exhibitsreturns to scale.
The production function q3 exhibitsreturns to scale.