Which of the following profit functions exhibits a Leontief production function? A)$\pi$ = P x K^0.75L^0.50 - 20L - 35K. B)$\pi$ = P x min(2L, 5K) - 20L - 35K. C)$\pi$ = P x (3K + 4L) - 20L - 35K. D)$\pi$ = P x (3K^0.5 + 4L^0.5)^1/0.2 - 20L - 35K.

Question

Quizplus · Accepted Answer

A Leontief production function has fixed proportions of inputs, meaning that the output is limited by the input that is available in the smallest amount. Choice B has a minimum function that limits output based on the input that is available in the smallest amount, which is indicative of a Leontief production function. The other choices do not exhibit a fixed proportion of inputs.

Which of the Following Profit Functions Exhibits a Leontief Production π\piπ

Which of the Following Profit Functions Exhibits a Leontief Production $\pi$