Given the simple production function Q = 3K + 4L, where L is the quantity of labor employed and K is thequantity of capital employed, assuming K = 2 and L = 3, what would it mean if output was less than 18?The firm is not employing labor and capital efficiently.Labor is less productive than capital.The firm is out of business.The production function was not specified correctly. Let U(x,y) = √xywith MUX = √ and MU₁ = √2√√xLet I = $100, Px = $10 and Py = $10 be the initial set of2√√yprices and income. Now, let Px rise to $25. What is the (approximate) substitution effect of this change inprices?Substitution Effect = -0.3Substitution Effect = -2.1Substitution Effect = -2.3Substitution Effect = -1.8

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Answered: Given the simple production function Q…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following Cobb-Douglas production function: Y = AKªL® (1) where Y is aggregate output, K is capital, L is labour, and A, a, and ß are positive constants. a) Is function (1) in linear form? Convert it into linear form if it is not.
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