Think about the firm or industry in which you work (or would like to work). Choose a possible production function for this firm or a firm in that industry. Be sure to tell us what formula you have chosen and give some justification for why you are choosing it. Use only labor and capital as the inputs for the production function. Assuming the wage rate is 10 and the rental rate of capital is 20, tell us how much labor and capital your firm would use in this situation. It may help to assume some level of desired output as well.

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The industry I want to work in is biotechnology. For a firm in this industry, I think the Cobb Douglas Production function would fit the best. I think this because if you increase capital and keep labor the same, I think research (output) or product (output) would increase and vice versa, if they increase labor and keep capital the same, I think more research would be able to be done or more product would be able to be made. If an extra engineer was hired, more research or product would be produced even if capital did not increase. If more capital was used with no increase in labor then researchers would be able to be more efficient and get more research done because they have the funds to fast track the process. Therefore, I don't think the Leontief production function is the best fit and the Cobb Douglas makes the most sense to me. If I assume the desired output is 100, the wage rate is 10, and the rental rate of capital is 20, then I know L must be more than 10 and K must be less than 10. That is because if r was 10 instead of 20 then MRTS would equal 1. Then the MRTS linear line would intersect the isoquant at the point where K and L equal 10 each. I know the y-intercept will go down because r is the denominator in C/r. That will cause the x-intercept to increase and the new MRTS line with a slope of 0.5 to intersect the isoquant at a point to the right of where it was before. This would mean a higher L and lower K. The industry I want to work in is biotechnology. For a firm in this industry, I think the Cobb Douglas Production function would fit the best. I think this because if you increase capital and keep labor the same, I think research (output) or product (output) would increase and vice versa, if they increase labor and keep capital the same, I think more research would be able to be done or more product would be able to be made. If an extra engineer was hired, more research or product would be produced even if capital did not increase. If more capital was used with no increase in labor then researchers would be able to be more efficient and get more research done because they have the funds to fast track the process. Therefore, I don't think the Leontief production function is the best fit and the Cobb Douglas makes the most sense to me. If I assume the desired output is 100, the wage rate is 10, and the rental rate of capital is 20, then I know L must be more than 10 and K must be less than 10. That is because if r was 10 instead of 20 then MRTS would equal 1. Then the MRTS linear line would intersect the isoquant at the point where K and L equal 10 each. I know the y-intercept will go down because r is the denominator in C/r. That will cause the x-intercept to increase and the new MRTS line with a slope of 0.5 to intersect the isoquant at a point to the right of where it was before. This would mean a higher L and lower K.

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My preferred industry is fast food production companies I am choosing the CobbDouglas Production Fun... View the full answer