Question
The production function Q = f(L,K) where K is capital, L is Labour is such that when K and L are scaled up by a
The production function Q = f(L,K) where K is capital, L is Labour is such that when K and L are scaled up by a factor then Q is scaled up a factor n .
(1) What is such a function called?
(2) What does the index of n in n represent?
(3) What is Q* = f(K, L) in terms of Q.
(4) If n = 2 and K and L are both increased by 5% find the % increase in Q.
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0073379616, 73379611, 978-0697789938
