We manufacturer automobiles given the production function q = 5KL where q is the number of autos assembled per eight-hour shift, K is the number of robots used on the assembly line (capital) and L is the number of workers hired per hour (labor). If we use K = 10 robots and L = 10 workers in order to produce q = 450 autos per shift, then we know that production is:
A) technologically efficient.
B) technologically inefficient.
C) maximized.
D) optimal.

Question

Quizplus · Accepted Answer

Given the production function q = 5KL, substituting K = 10 and L = 10, we get q = 5 * 10 * 10 = 500. However, the actual production is 450 autos, which is less than the potential output of 500 autos. This indicates that the production is technologically inefficient because it is not achieving the maximum output possible with the given inputs.

We Manufacturer Automobiles Given the Production Function Q = 5KL