A firm doubles its budget having previously had the equation K= 10 - 0.5L. The new equation becomes:

Name: A firm doubles its budget having previously had the equation K= 10 - 0.5L. The new equation becomes:
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Question

Quizplus · Accepted Answer

When the budget doubles, the coefficient of L should be multiplied by 2 to maintain the same relationship between budget and labor. So, the new equation should be K = 10 - 0.5L x 2, which is K = 10 - L. This can also be expressed as K = -1L + 10 or K = 20 - 0.5L, which is the same as option D.

A Firm Doubles Its Budget Having Previously Had the Equation