Let a firm's production function be $Q = 100 ( a L + b K )$. The production function then becomes $Q = 500 ( a L + b K )$. Which of the following statements is true?
A)Neutral technological progress has occurred.
B)Labor-saving technological progress has occurred.
C)Capital-saving technological progress has occurred.
D)Economies of scale have increased.

Question

Quizplus · Accepted Answer

The increase in output from $100 ( a L + b K )$ to $500 ( a L + b K )$ without changing the proportion of labor (L) and capital (K) indicates neutral technological progress, as the technology improvement affects the production of both inputs equally.

Let a Firm's Production Function Be Q=100(aL+bK)Q = 100 ( a L + b K )Q=100(aL+bK)

Let a Firm's Production Function Be $Q = 100 ( a L + b K )$