A firm that manufactures office desks has the following production function in t

Question

A firm that manufactures office desks has the following production function in the short run:

Q = 400 L0.8 K0.5

where

Q = the quantity of chairs produced in a month

L = the amount of labor (hours of work) used in a month

K = the amount of capital (building, machines, equipment) used.

Assume that in the short run L = 1,000 and K = 100.

2.     What is the quantity produced if L = 1,200 and K = 100?

A firm that manufactures office desks has the following production function in the short run: Q = 400 L0.8 K0.5 where Q = the quantity of chairs produced in a month L = the amount of labor (hours of work) used in a month K = the amount of capital (building, machines, equipment) used. Assume that in the short run L = 1,000 and K = 100. What is the quantity produced if L = 1,200 and K = 100?

Explanation / Answer

1. L=1000 K=100

Q = 400*(1000^0.8)*(100^0.5) = 1004754.57

2. Q = 400*(1200^0.8)*(100^0.5) = 1162532.19

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