Suppose an economy's output is determined by a Cobb-Douglas production function Y-AKL¹0 where A-8 and a-0.2.All other things remaining unchanged, if labour input increases by 5 percent, output will rise by:Ⓒ 1%O 4%O 2%5%

Production function refers to the mathematical equation the depicts the relationship between the…

Suppose an economy's output is determined by a Cobb-Douglas production function Y = AKL¹ where A-8 and a-0.2. All other things remaining unchanged, if labour input increases by 5 percent, output will rise by: O 1% O 4% Ⓒ2% O 5%

Suppose an economy's output is determined by a Cobb-Douglas production function Y = AKL¹ where A-8 and a-0.2. All other things remaining unchanged, if labour input increases by 5 percent, output will rise by: O 1% O 4% Ⓒ2% O 5%

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.11P

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Suppose an economy's output is determined by a Cobb-Douglas production function Y-AKL¹0 where A-8 and a-0.2.
All other things remaining unchanged, if labour input increases by 5 percent, output will rise by:
Ⓒ 1%
O 4%
O 2%
5%

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