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A C WL+RK C WL+R K y y WL+R K L L y Usingthe Lagrangianmethod: L WL+R K L L y L K DL DK RL y L DL Dy RL
A C WL+RK C WL+R K y y WL+R K L L y Usingthe Lagrangianmethod: L WL+R K L L y L K DL DK RL y L DL Dy RL
C=wL +rK
( ) ( )
3 1
K K 4 4
C=wL +r y=wL+r L y
y L
Using the Lagrangian method :
( )
3 1 1 1
L=wL+r ( )
K 4 4
L
L y + λ L4 K 4− y
3 1 −3
4 4 4
dL rL y λK
= + =0
dK 1
4
L4
3
4
dL r L
= −λ=0
dy 3
4y 4
1 1
dL
=L 4 K 4 − y=0
dλ
1 3
y 4 L4
K= 3
44
3
r L4
λ= 3
4y 4
( )
4 4
L r
y= 3
2 w
1
() 1 43
4
16
y= =2
2 4
1 3
2 4 16 4
K= 4
=4
4 3
b¿
C=wL +rK =1∗16+ 4∗4=32
C 32
A C= = =16
y 2
1 1
4 4
y=L K
()
−3 1
dy 1 4 4
= L K
dL 4
( ) ()
−3 1 −3 1
dy 1 4 1 1
MC=w =1 L K 4 = 16 4
4 4=
dL 4 4 4
c¿
()
4
y 3
C=wL+r
L
1 1
4 4
y=L K
Using the Lagrangian method :
) +λ (L )
1 1
(
3
y 4 4
L=wL+r 4
K −y
L
( ) ( ) =0
4
4 y
r 3
dL 3 L
=w−
dL L
( )=0
1 −3
dL
= λ L4 K 4
dK
1 1
dL
=L 4 K 4 − y=0
dλ
L=
( 3)
4
ry
K=( ) ( )( wr ) y
y 43 3
L
=
4
C=( + ) y= y
16 3 49
3 4 12
C ( 12 ) 49
49 y
A C= = =
y y 12
dC 49
MC= =
dy 12
d¿
MC= AC =Q
∴ production function exhibits constant return s ¿ scale