What can you conclude about the returns to scale of the firm’s production function after the analysis in point (c)? Assume that each good can be sold at a price of $10. What is the effect of the CEO’s decision on profits? Would you agree with his choice?
Microecon problem set PART I: PRODUCTION FUNCTIONS 1. State whether the following claim is true or false, and briefly explain your answer. The following production function exhibits increasing returns to scale: Q= I, +1(1 2. Erin’s admission to a prestigious music school depends on the total score (Q) the admissions office decides to assign her. […]