How much do outputs increase when labor and capital increase from 1 to 2 units for the following production function ,q = 10L^0.5K^0.3? A) 7.4 units B) 7 units C) 8 units D) None of the above.

Question

Quizplus · Accepted Answer

The production function given is q = 10L^0.5K^0.3. When L and K both increase from 1 to 2, the output increases from q1 = 10(1)^0.5(1)^0.3 = 10 to q2 = 10(2)^0.5(2)^0.3 = 10(√2)(2^0.3). Calculating q2 gives approximately 17.4, so the increase in output is 17.4 - 10 = 7.4 units.

How Much Do Outputs Increase When Labor and Capital Increase