If the production level qo increases, both, labor used (L) and capital used (K*) will increase. If only the price of capital doubles and the price of labor remains at its initial level, the use of labor (L') increases and the use of capital (K*) decreases. If only the price of labor doubles and the price of capital remains at its initial level, the use of labor (L') increases and the use of capital (K*) decreases. If the price of capital and the price of labor both double, the cost- minimizing input quantities L* K* do not change. None of the above.
If the production level qo increases, both, labor used (L) and capital used (K*) will increase. If only the price of capital doubles and the price of labor remains at its initial level, the use of labor (L') increases and the use of capital (K*) decreases. If only the price of labor doubles and the price of capital remains at its initial level, the use of labor (L') increases and the use of capital (K*) decreases. If the price of capital and the price of labor both double, the cost- minimizing input quantities L* K* do not change. None of the above.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
Related questions
Question
![Consider a general Cobb-Douglas production function q= LK,
and assume the firm produces q=qo.
Which of the following is NOT TRUE? (hint: you can answer this
question purely with graphs)
If the production level qo increases, both, labor used (L*) and capital
used (K*) will increase.
If only the price of capital doubles and the price of labor remains at
its initial level, the use of labor (L') increases and the use of capital
(K*) decreases.
If only the price of labor doubles and the price of capital remains at
its initial level, the use of labor (L*) increases and the use of capital
(K*) decreases.
If the price of capital and the price of labor both double, the cost-
minimizing input quantities L* K* do not change.
None of the above.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F51f97baa-8e48-4f26-83e9-ee17da08d47b%2F39bd3c51-bb97-4477-b6bb-f01dadc6ce2e%2Fg807ad2_processed.png&w=3840&q=75)
Transcribed Image Text:Consider a general Cobb-Douglas production function q= LK,
and assume the firm produces q=qo.
Which of the following is NOT TRUE? (hint: you can answer this
question purely with graphs)
If the production level qo increases, both, labor used (L*) and capital
used (K*) will increase.
If only the price of capital doubles and the price of labor remains at
its initial level, the use of labor (L') increases and the use of capital
(K*) decreases.
If only the price of labor doubles and the price of capital remains at
its initial level, the use of labor (L*) increases and the use of capital
(K*) decreases.
If the price of capital and the price of labor both double, the cost-
minimizing input quantities L* K* do not change.
None of the above.
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