Question: Suppose a firm's production function initially took the form Q = 500(L + 3K). However, as a result of a manufacturing innovation, its production function

Suppose a firm's production function initially took the form Q = 500(L + 3K). However, as a result of a manufacturing innovation, its production function is now Q = 1000(0.5L + 10K).

a.Show that the innovation has resulted in technological progress in the sense defined in the text.

b.Is the technological progress neutral, labor saving, or capital saving?

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