A firm initially has a linear production function, q= 13L + 24K

Economics Nov 07, 2020

A firm initially has a linear production function, q= 13L + 24K. The firm undertakes an organizational innovation that doubles the marginal product of labor, but does not affect the marginal product of capital. What is the new production function? If the productivity of labor doubles, then the new production function (as a function of Land K) will be

Expert Solution

Answer. q= 26L+24K

Reason- q=13L+24K

MPL=13 it doubles so MPL=26

There is no change in MPk, so MPk=24

New production function=

q= 26L+24K

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