Suppose the production of VCRs can be represented by the following production function:
Q = L^0.4 K^0.4.The firm currently produces
Units.If all inputs doubled,the new level of output will equal

Question

Suppose the production of VCRs can be represented by the following production function: Q = L^0.4 K^0.4.The firm currently produces Units.If all inputs doubled,the new level of output will equal

Quizplus · Accepted Answer

When all inputs are doubled, the production function becomes:
Q = (2L)(2S)^1(2U)^1(P)^10.4(S)^1(K)(2S)^1(2U)^1(P)^10.4(S)^1(P)^0

Simplifying this expression, we get:

Q = 2^2LSU(P)^10.8(S)^2KP^0

Therefore, the new level of output will be 2^2 times the original level of output, which is 4 times the original level of output.

Suppose the Production of VCRs Can Be Represented by the Following