Suppose that a firm's production function is given by the following relationship: Q = 2.5√LK (i.e., Q = 2.5L0.5 K0.5) where is output, L is labor input, and K is capital input. What is the percentage increase in output if labor input is increased by 10%? (Assume that capital input is held constant.) What is the percentage increase in output if capital input is increased by 25%? (Assume that labor input is held constant.) What is the the percentage increase in output if both labor and capital are increased by 10%?
Suppose that a firm's production function is given by the following relationship: Q = 2.5√LK (i.e., Q = 2.5L0.5 K0.5) where is output, L is labor input, and K is capital input. What is the percentage increase in output if labor input is increased by 10%? (Assume that capital input is held constant.) What is the percentage increase in output if capital input is increased by 25%? (Assume that labor input is held constant.) What is the the percentage increase in output if both labor and capital are increased by 10%?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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