Given the simple production function Q = 3K + 4L, where L is the quantity of labor employed and K is the quantity of capital employed, assuming K = 2 and L = 3, what would it mean if output was less than 18?
A) The firm is out of business.
B) The firm is not employing labor and capital efficiently.
C) The production function was not specified correctly.
D) Labor is less productive than capital.

Question

Quizplus · Accepted Answer

If output is less than 18 in this production function, it means that the firm is not employing labor and capital efficiently. The given inputs of K = 2 and L = 3 should result in output of 18, so any output less than 18 indicates that the factors of production are not being used to their full potential. The other options are not relevant or supported by the information given.

Given the Simple Production Function Q = 3K + 4L