Suppose a production function for a firm takes the following algebraic form: Q = 2KL - (0.2)L²,where Q is the output of sweaters per day.Now suppose the firm is operating with 8 units of capital (K =8)and 10 units of labour (L=10).What is the output of sweaters? A)30 sweaters per day B)60 sweaters per day C)80 sweaters per day D)140 sweaters per day E)155 sweaters per day

Question

Quizplus · Accepted Answer

Q = 2KL - (0.2)L² Q = 2(8)(10) - (0.2)(10)(1)(1^2)(8^2)(1) Q = 160 - (0.2)(640) Q = 160 - 128 Q = 32 units Therefore, the output of sweaters is 32 sweaters per day. None of the given choices match the calculated output of 32, so we must use process of elimination to determine the closest option. Option D is the closest, with a value of 140 sweaters per day.

Suppose a Production Function for a Firm Takes the Following