A firm has the production function, Q=15L^1/3 K^2/3 where ? is output, ? is labour units and ? is capital units. Calculate and interpret the degree of homogeneity. If labour and capital units increase by 5%, what is the percentage change in output?

A firm has the production function, Q=15L^1/3 K^2/3 where ? is output, ? is labour units and ? is capital units. Calculate and interpret the degree of homogeneity. If labour and capital units increase by 5%, what is the percentage change in output?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section7.A: Appendix: A Closer Look At Production And Cost

Problem 1AQ

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A firm has the production function, Q=15L^1/3 K^2/3 where ? is output, ? is labour units and ? is capital units.

Calculate and interpret the degree of homogeneity.

If labour and capital units increase by 5%, what is the percentage change in output?

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