Consider a firm using a technology defined by the linear production function = q = f(K,...

Consider a firm using a technology defined by the linear production function = q = f(K, L) = K + L

Which of the following statements are correct? There might be multiple

a) The elasticity of output with respect to capital is equal to the inverse of the average product of capital

b) The elasticity of output with respect to labor is constant

c) The elasticity of long-run cost with respect to output is equal to 1

d) The elasticity of substitution is infinity

Expert Solution

All statements except statement (b) are correct.

Rahul Sunny answered 7 months ago

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