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The following is the production function of a business: Q = f(K, L) = 560
The following is the production function of a business: Q = f(K, L) = 560.440.3 What are all the business information you can obtain from the given production function? There is no need to perform any mathematical calculations. Answer in words.
Expert Solution
The most important information is that the production function exhibits decreasing returns to scale as increase all inputs by t times will lead to an increase in output by t0.4+0.3 = t0.7 times < t times
Further, capital is more productive as the marginal product of capital is higher than the marginal product of labor in the production function (as the power of K is higher than the power of L)
The production function is cobb douglas in nature
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