Q1. Assume that the production function for a commodity is given by Q = 10√LK, where Q is the quantity of o/p, the quantity of labor is L and the quantity of capital is K.
(a) Indicate whether this production function exhibits constant, increasing, or decreasing returns to scale.
(b) Does the production function exhibit withdrawing returns? If so then explain when does the law of diminishing returns begin to activate? Could we ever get negative returns?
Q2. If an input necessary for production is in limited provide so that an expansion of the industry raises costs for all existing firms in market afterward long-run market supply curve for a good could be.