2. A firm is required to produce 234 of output using quantities of labor and capital...

2. A firm is required to produce 234 of output using quantities of labor and capital (L, K) = (21, 6) . For each of the following production functions, state whether it is possible to produce the required output with the given input combination. If it is possible, state whether producing Q = 234 with input combination is technically efficient or inefficient.

(a) Q = 8L + 7K

(b) Q=3KL+L-4

(d) Q= min{2L, 25K}

Solutions

Expert Solution

(a) Q = 8L + 7K = 8*21 + 7*6 = 210, thus not possible to produce 234

(b) Q = 3KL+L-4 = 3*21*6 + 21 - 4 = 395, thus possible to produce 234 but it is technically inefficient

(d) Q = min{2L, 25K} = min{2*21, 25*6} = min{42, 150} = 42, thus not possible to produce 234

Rahul Sunny answered 1 year ago

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