Suppose long-run production of automobile per day is given by qA = KL (for example, if K = 7 and L = 3, then 21 autos will be produced daily).
a. The input bundle given by (K = 5, L = 5) is sufficient to produce 25 units of output. Plot the 25-unit isoquant by identifying four additional input bundles sufficient to produce 25 units of output (use exact values for the four additional input bundles and label them and their corresponding quantities of inputs).
b. In the short run (holding K fixed) does this production function exhibit diminishing marginal returns, constant marginal returns, or increasing marginal returns? (Explain your answer with an example, like K =5)
c. In the long run (allowing both K and L to change) does this production function exhibit decreasing returns to scale, constant returns to scale, or increasing returns or scale? (Explain your answer with an example.)