Floppy Corp produces software using two inputs, large (700 MB)discs, L, and small (210 MB)minidiscs, S. Its production function is given by: Q = (L/2)+ S where Q is output.
i)Does the production function exhibit constant, increasing, or decreasing returns to scale?
ii)Draw isoquants for Q = 2 and Q = 3. What is the firm's marginal rate of technical substitution?
iii)Suppose small disks cost $3 each and large disks cost $1 each. How many of each type of disk will Floppy Corp use to produce Q = 2? Q = 3?
iv)What is the firm's cost function when small disks cost $3 and large disks cost $1?

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The Answer of Floppy Corp produces software using two inputs, large (700 MB)discs, L, and small (210 MB)minidiscs, S. Its production function is given by: Q = (L/2)+ S where Q is output.
i)Does the production function exhibit constant, increasing, or decreasing returns to scale?
ii)Draw isoquants for Q = 2 and Q = 3. What is the firm's marginal rate of technical substitution?
iii)Suppose small disks cost $3 each and large disks cost $1 each. How many of each type of disk will Floppy Corp use to produce Q = 2? Q = 3?
iv)What is the firm's cost function when small disks cost $3 and large disks cost $1?

Floppy Corp Produces Software Using Two Inputs, Large (700 MB)discs