Suppose that a lawn mowing services production function for lawns mowed in a week is M = (LK)^1/2 where L is labor hours and K is the amount of capital (mowers and trimmers).The expansion path depends on A) the wage rate only. B) the rental rate only. C) both the wage and rental rates. D) neither the wage nor rental rates.

Question

Quizplus · Accepted Answer

The expansion path is determined by both the wage rate and the rental rate, as the production function includes both variables (L and K). An increase in either input will lead to a change in the amount of output produced, and thus affect the shape of the expansion path. Therefore, the answer is C: both the wage and rental rates.

Suppose That a Lawn Mowing Services Production Function for Lawns