Asked by Estefanie Estupinan on Jul 14, 2024
Verified
Suppose there are ten identical manufacturing firms that produce computer chips with machinery (capital, K) and labor (L) , and each firm has a production function of the form q = 10KL0.5. What is the industry-level production function?
A) Q = 10K10L5
B) Q = 100KL0.5
C) Q = 100L0.5
D) none of the above
Manufacturing Firms
Companies that produce and sell goods using raw materials, labor, and machinery.
Computer Chips
Small semiconductor devices that contain integrated circuits used to perform computing tasks.
Capital
Assets used in the production of goods and services, including physical tools, machinery, buildings, as well as intangible items like software or intellectual property.
- Understand the concept of a production function and its relevance to the efficiency of different forms of production.
Verified Answer
Q = 10(q) = 10(10KL0.5) = 100KL0.5
Therefore, the best choice is B.
Learning Objectives
- Understand the concept of a production function and its relevance to the efficiency of different forms of production.
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