The Ascot Corporation, which produces stationery, hires a consultant to estimate its production function. The consultant concludes
Question:
Q = 0.9P + 0.06L
where Q is the number of pounds of stationery produced by Ascot per year, L is the number of hours of labor per year, and P is the number of pounds of paper used per year.
a. Does this production function seem to include all the relevant inputs? Explain.
b. Does this production function seem reasonable if it is applied to all possible values of L? Explain.
c. Does this production function exhibit diminishing marginal returns?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Managerial Economics Theory Applications and Cases
ISBN: 978-0393912777
8th edition
Authors: Bruce Allen, Keith Weigelt, Neil A. Doherty, Edwin Mansfield
Question Posted: