   Chapter 14.1, Problem 3E

Chapter
Section
Textbook Problem

A manufacturer has modeled its yearly production function P (the monetary value of its entire production in millions of dollars) as a Cobb-Douglas functionP(L,K) = 1.47L0.65K0.35where L is the number of labor hours (in thousands) and K is the invested capital (in millions of dollars). Find P(120, 20) and interpret it.

To determine

To find: The value of P(120,20) and interpret it.

Explanation

It is given that the Cobb-Douglas function is P(L,K)=1.47L0.65K0.35, where L denotes the number of labor hours (in thousand) and K represents the amount invested as a capital (in millions of dollars).

Here, L=120 and K=20.

Substitute L=120 and K=20 in Cobb-Douglas function,

P(120,20)=1

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