A firm’s technology (recipe for combining factors of production) has an impact on its costs. Given a firm has a technology Q(L,K) = L0.8K0.2 (Where L represents labour and K represents Capital), which of the following is/are necessarily true? A firm’s technology (recipe for combining factors of production) has an impact on its costs. Given a firm has a technology Q(L,K) = L0.8K0.2 (Where L represents labour and K represents Capital), which of the following is/are necessarily true? Costs are exponentially increasing (by an exponent of 0.6) The elasticity of substitution between the factors is σ=1 The firm will spend equal amounts on the Labour and Capital factors Returns to scale are decreasing Optimum amounts of inputs for a given output is found by the interaction of cost functions and technology
A firm’s technology (recipe for combining factors of production) has an impact on its costs. Given a firm has a technology Q(L,K) = L0.8K0.2 (Where L represents labour and K represents Capital), which of the following is/are necessarily true? A firm’s technology (recipe for combining factors of production) has an impact on its costs. Given a firm has a technology Q(L,K) = L0.8K0.2 (Where L represents labour and K represents Capital),
which of the following is/are necessarily true?
Costs are exponentially increasing (by an exponent of 0.6)
The elasticity of substitution between the factors is σ=1
The firm will spend equal amounts on the Labour and Capital factors
Returns to scale are decreasing
Optimum amounts of inputs for a given output is found by the interaction of cost functions and technology
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