Sometimes, we are interested in the rate at which the MRTS diminishes. That is, does the slope of the isoquant flatten out quickly or slowly as the capital is replaced with labor? This is measured by the elasticity of substitution σ which is the percent change in the ratio K/L per a percent change in the MRTS: σ = (dK/L /dMRTS) (MRTS/ K/L)

The problem consider the constant elasticity of substitution production function

q = (L^rho + K^rho )^1/rho

Let rho = 1/2 and rho be any arbitrary constant less than one.

Required:
a. Explain what it means if σ is large and what it means if σ is small.
b. Calculate the MRTS of the constant elasticity of substitution production function.
c. Solve for K/L in terms of the MRTS.

Salvador county issued $25 million of 5% demand bonds for construction of a county maintenance building. the county has no take-out agreement related to the bonds. it estimates that 20% of the bonds would be demanded (called) by the buyers if interest rates increased at least 1%. at year-end rates on comparable debt were 7%. how should these demand bonds be reported in the government-wide financial statements at year-end? a) $25 million in the long-term liability section of the governmental activities column. b) $5 million in the current liability section of the governmental activities column and $20 million in the long-term liabilities section of the governmental activities column. c) $5 million in the governmental activities column and $20 million would be reported in the schedule of changes in long-term debt obligations. d) $25 million in the current liability section of the governmental activities column

How are interest rates calculated by financial institutions? financial institutions generally calculate interest as (1) interest or (.

12. to produce a textured purée, you would use a/an a. food processor. b. wide-mesh sieve. c. immersion blender d. food mill.