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

Question

Quizplus · Accepted Answer

A Leontief production function has a fixed ratio of inputs, meaning that the output is limited by the input that is available in the least amount. In option B, the profit function has a minimum function that takes the minimum of 2L and 5K, which is a characteristic of a Leontief production function. Therefore, option B exhibits a Leontief production function.

Which of the Following Profit Functions Exhibits a Leontief Production