Asked by Rothana Martaa on May 21, 2024
Verified
Bridget's Brewery production function is given by 
where K is the number of vats she uses and L is the number of labor hours. Does this production process exhibit increasing, constant or decreasing returns to scale? Holding the number of vats constant at 4, is the marginal product of labor increasing, constant or decreasing as more labor is used?
Returns to Scale
The rate at which output increases in response to proportional increases in all inputs.
Production Function
An equation or graph that shows the output generated from different combinations of inputs, usually focusing on labor and capital.
Marginal Product
The increase in output that results from an additional unit of input.
- Differentiate the distinctions in scaling returns as increasing, constant, and decreasing within production contexts.
- Build relationships between the gradient of isoquants, the marginal contributions of resources, and the concept of declining marginal productivity.
Verified Answer
LT
Lamar Tossils
May 26, 2024
Final Answer :
Since 
we know the production process exhibits constant returns to scale. Holding the number of vats constant at 4 will still result in a downward sloping marginal product of labor curve. That is the marginal product of labor decreases as more labor is used.
we know the production process exhibits constant returns to scale. Holding the number of vats constant at 4 will still result in a downward sloping marginal product of labor curve. That is the marginal product of labor decreases as more labor is used.
Learning Objectives
- Differentiate the distinctions in scaling returns as increasing, constant, and decreasing within production contexts.
- Build relationships between the gradient of isoquants, the marginal contributions of resources, and the concept of declining marginal productivity.