12.Can a firm have a production function that exhibits increasing returns to scale,constant returns to scale,and decreasing returns to scale as output increases？Discuss. Most firms have production functions that exhibit first increasing.then constant and ultimately decreasing returns to scale.At low levels of output,a proportional increase in all inputs may lead to a larger-than-proportional increase in output. based on an increase in the opportunity for each factor to specialize.For exampk and two computers,each peron can ecialize by at they are bes which all double.As the firm grows,the opportunities for pecialization may diminish anda doubling of all inputs will lead to only a doubling of output.When there are constant returns to scale,the firm is replicating what it is already doing.At some level of poduction,thefirm will besolarge that when inputsare doubled,output will less than double,that can arise from management diseconmie 13.Give an aple of a production pro ess in which the short run involves Any small business where one input requires more than a week to change woul be an example.The process of hiring more labor,which requires announcing the position,interviewing applicants,and negotiating terms ofemployment,can take a day.if done through a temporary employment agency.Usually.however.the Expansion,requiring a larger location,will also take longer than a week 二、EXERCISES 1.The menu at Joe's coffee shop consists of a variety of coffee drinks,pastries and sandwiches.The marginal product of an additional worker can be defined as the number of customers that can be served by that worker in a given time odbeen mployinone worker,but is copidering hiringo ain why the product of the and third workers might be higher than the first. Why might you expect the marginal product of additional workers to eventually diminish? The marginal product could well increase for the second and third workers.since each of the first 2 or 3 workers would be able to specialize in a different task.If there is only 1 worker,then that worker will have to take orders and prepare all the food. Eventually,howev er the marginal product would dimin sh bec here would be toc many people behind the counter trying to accomplish a limited number of tasks. 2.Suppose a chair manufacturer is producing in the short run (with its existing plant and equipment).The manufacturer has observed the following levels of production corresponding to different numbers of workers: 12. Can a firm have a production function that exhibits increasing returns to scale, constant returns to scale, and decreasing returns to scale as output increases? Discuss. Most firms have production functions that exhibit first increasing, then constant, and ultimately decreasing returns to scale. At low levels of output, a proportional increase in all inputs may lead to a larger-than-proportional increase in output, based on an increase in the opportunity for each factor to specialize. For example, if there are now two people and two computers, each person can specialize by completing those tasks that they are best at, which allows output to more than double. As the firm grows, the opportunities for specialization may diminish and a doubling of all inputs will lead to only a doubling of output. When there are constant returns to scale, the firm is replicating what it is already doing. At some level of production, the firm will be so large that when inputs are doubled, output will less than double, a situation that can arise from management diseconomies. 13. Give an example of a production process in which the short run involves a day or a week and the long run any period longer than a week. Any small business where one input requires more than a week to change would be an example. The process of hiring more labor, which requires announcing the position, interviewing applicants, and negotiating terms of employment, can take a day, if done through a temporary employment agency. Usually, however, the process takes a week or more. Expansion, requiring a larger location, will also take longer than a week. 二、EXERCISES 1. The menu at Joe’s coffee shop consists of a variety of coffee drinks, pastries, and sandwiches. The marginal product of an additional worker can be defined as the number of customers that can be served by that worker in a given time period. Joe has been employing one worker, but is considering hiring a second and a third. Explain why the marginal product of the second and third workers might be higher than the first. Why might you expect the marginal product of additional workers to eventually diminish? The marginal product could well increase for the second and third workers, since each of the first 2 or 3 workers would be able to specialize in a different task. If there is only 1 worker, then that worker will have to take orders and prepare all the food. Eventually, however, the marginal product would diminish because there would be too many people behind the counter trying to accomplish a limited number of tasks. 2. Suppose a chair manufacturer is producing in the short run (with it s existing plant and equipment). The manufacturer has observed the following levels of production corresponding to different numbers of workers: