Cobb-Douglas and Increasing Returns to Scale

Safeway is one of many grocery stores that offers self-checkout lines and checkout lines withcashiers. Consider output (y) as the number of customers served per hour, and humans(cashiers and baggers) and registers are respectively input 1 (X1) and input 2 (m). The old-fashioned way, one register (X2=1) with one cashier and one bagger (X1=2) can serve on average100 scanned items per hour (y=100). The new way, four self-checkout registers (X2=4) with onesupervising cashier (X1=1) can serve on average 100 scans per hour (y=100), since customers arenot as fast. In either case, you need both kinds of inputs (labor and capital) to serve customers.In addition, the more the registers the shorter the lines, so that the average number ofcustomers served increases by scaling up. w Types of registerlines X1: Employees y: Customers/hourOseIf-checkout/S old-fashionm Oself-checkout/lo old-fashion 4000 Gself-checkout/Bold-fashion 4000m Sself-checkout/O old-fashion105elf-checkout/0old-fashion —_ 4000 a)

Don't use plagiarized sources. Get Your Custom Essay on
Cobb-Douglas and Increasing Returns to Scale
Order Essay

The table above shows the results from a sample of 5 stores with different combinationsof old-fashion registers with cashier and bagger, and new self-checkout registers. In agraph with employees (X1) on the horizontal axis, and registers (X2) on the vertical axis, plot the input combinations for each store. With a line, connect the stores that belongto the same isoquant. b) With a larger sample of stores, Safeway estimated the following production function: y =X12X2. What is the marginal product of adding additional personnel (By/OX1)? What is themarginal product of adding additional registers (By/om)? c) What is the Technical Rate of Substitution between personnel and registers? d) If you double both inputs, does the number of customers served double, more thandouble or less than double?

Grand Paper Writers
Order NOW For A 10% Discount!
Pages (550 words)
Approximate price: -

Our Advantages

Plagiarism Free Papers

All papers are written by the best professional writers to ensure 100% originality. We always provide plagiarism reports whenever we deliver completed papers.

Free Revisions

All papers by Grand Paper Writers are completed and submitted on time. This timely delivery of papers gives you time to go through the paper before the official deadline.


As an additional service, we will provide a title page that precedes the contents of your paper. Here, you will provide your personal details.


We also ensure that we provide an extra page for the references or bibliographies following referencing rules.

Originality & Security

At, we guarantee students for the provision of security and original work. All your personal information is handled with confidentiality and is not shared with third parties. Additionally, we ensure that we provide original content with accompanying plagiarism reports to show originality.

24/7 Customer Support

Our customer support team is always available 24/7 to provide instant responses to any queries raised by students.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services has the best professional essay writers for quality services.


Flexible Pricing

Here, a, we do not compromise on the time of our clients. We always deliver all completed papers on or before the deadlines.


Admission Help & Client-Writer Contact provides an interactive portal where students can communicate directly to their writers.


Paper Submission

Here, a, we do not compromise on the time of our clients. We always deliver all completed papers on or before the deadlines.


Customer Feedback appreciates feedback from our clients to help us improve the delivery of essay writing services. As such, we are constantly changing our policies to ensure maximum customer and writer satisfaction.