Question

What is the production function of the firm?

1) q = l^(1/2)k^(3/4)
2) q = l^(1/4)k^(3/2)
3) q = l^(1/3)k^(1/2)
4) q = l^(1/2)k^(1/3)

Answer 1

The correct production function for the firm is q = l^(1/2)k^(3/4), where q represents the quantity of output, l represents the quantity of labor (typists), and k represents the quantity of capital (personal computers).

Step-by-step explanation:

The correct production function for the firm is:

1. q = l^(1/2)k^(3/4)

Where:

• q represents the quantity of output
• l represents the quantity of labor (typists)
• k represents the quantity of capital (personal computers)

This function shows that the quantity of output q is determined by the quantity of labor l, raised to the power of 1/2, and the quantity of capital k, raised to the power of 3/4. This power relationship signifies the differing impact and importance of labor and capital in production, highlighting the asymmetric influence each input wields in determining the overall output.