A firm has the production function Q(L, K) = √K + 2√L. The price of one unit of capital is R > 0,and the price of one unit of labor is W > 0. Which of the following statements is correct?The production function can be represented by a CES production function [aLº +6K²] for suitable values ofb and p.a₂The marginal rate of technical substitution is MRT Sık (L, K):2√L√KO If W = R, the fi rm's demand for labor is four times the demand for capital.O The production function has increasing returns to scale.

Production function: The price of capital is R and the price of labor is W.The marginal rate of…

A firm has the production function Q(L, K) = √K + 2√L. The price of one unit of capital is R > 0, and the price of one unit of labor is W > 0. Which of the following statements is correct? O The production function can be represented by a CES production function [aLº + bK²] for suitable values of a, b and p. The marginal rate of technical substitution is MRT Suk (L, K) = = 2√L √K O If W = R, the fi rm's demand for labor is four times the demand for capital. O The production function has increasing returns to scale.

A firm has the production function Q(L, K) = √K + 2√L. The price of one unit of capital is R > 0, and the price of one unit of labor is W > 0. Which of the following statements is correct? O The production function can be represented by a CES production function [aLº + bK²] for suitable values of a, b and p. The marginal rate of technical substitution is MRT Suk (L, K) = = 2√L √K O If W = R, the fi rm's demand for labor is four times the demand for capital. O The production function has increasing returns to scale.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A firm has the production function Q(L, K) = √K + 2√L. The price of one unit of capital is R > 0,
and the price of one unit of labor is W > 0. Which of the following statements is correct?
The production function can be represented by a CES production function [aLº +6K²] for suitable values of
b and p.
a₂
The marginal rate of technical substitution is MRT Sık (L, K):
2√L
√K
O If W = R, the fi rm's demand for labor is four times the demand for capital.
O The production function has increasing returns to scale.

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Step 3: Determine the elasticity of substation of given production function:

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