Problem 7-1

Use a cell reference or a single formula where appropriate in order to receive full cred
you will not receive full credit for your answers.

Labor, L, and capital, K, are the only inputs in each of the following production functions b
For each production function, find the output associated with the following output combina
L = 8, K = 8.
a. q1 = (L + K)2
b. q2 = (sqrt(L) + sqrt(K))2
c. q3 = (20 + sqrt(L) + sqrt(K))2

L K q1 q2 q3
2 2 16 8 521
4 4 64 16 576
8 8 256 32 658

Determine the return to scale of each production function.

The production function q1 exhibits increasing returns to scale.
The production function q2 exhibits сonstant returns to scale.
The production function q3 exhibits decreasing returns to scale.
rder to receive full credit. Do not copy and paste values, as

g production functions below.

ollowing output combinations: L = 2, K = 2; L = 4, K = 4; and

returns to scale.
returns to scale.
returns to scale.
Project Description:

In this problem, you will investigate the return to scale of different production functions.

Steps to Perform:

Step

5
6
7
8
Project Description:

In this problem, you will investigate the return to scale of different production functions.

Steps to Perform:

Instructions
Use a cell reference or a single formula where appropriate in order to receive full credit. Do not copy

Start Excel.
In cell E7, by using relative and absolute cell references, calculate the value of production function q
Copy the formula from cell E7 down the column to cell E9.
In cell F7, by using relative and absolute cell references, calculate the value of production function q
Copy the formula from cell F7 down the column to cell F9.
In cell G7, by using relative and absolute cell references, calculate the value of production function q
Copy the formula from cell G7 down the column to cell G9.
In cell G12, determine the return to scale of the production function q1.
In cell G13, determine the return to scale of the production function q2.
In cell G14, determine the return to scale of the production function q3.
Save the workbook. Close the workbook and then exit Excel. Submit the workbook as directed.
 Points
Possible

1
1
1
0