Mc Ac

Figure 13.11 Total-, average-, and niarginal-eost curves with constant returns to scale

Figure 13.11 Total-, average-, and niarginal-eost curves with constant returns to scale

Figure 13.12 Total-, average-, and marginal-cost curves for diseconomies of scale

y > />. The cosl function is said to exhibit diseconomies of scale. Figure 13.12 illustrates. (Refer to section 11.5 for a more comprehensive discussion of returns to scale.)

Cost-Minimization with the CES Production Function

In chapter 11 we defined the CES production function as y = [SL~r + (1 - 8)kT'rl/''- & >0.r>0 where the elasticity of substitution a is given by

0 0

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