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28 Sep 2019
Consider the following Cobb-Douglas production for red bean coffee. q=(l^0.2)*(k^0.5)
a. Intuitively, why are Cobb-Douglas production functions more appropriate representations of reality than, say, linear production functions?
b. Based on the function above, is red bean coffee's business experiencing economies or diseconomies of scale? Explain how you arrived at your answer.
c. If red bean coffee decided to boost labor by 15% and captail by 10%, how much will productivity increase?
d. If red bean coffee wanted to boost productivity by 40% and already knew they were going to increase capital by 20%, how much would they have to increase their labor force to reach this production target?
Consider the following Cobb-Douglas production for red bean coffee. q=(l^0.2)*(k^0.5)
a. Intuitively, why are Cobb-Douglas production functions more appropriate representations of reality than, say, linear production functions?
b. Based on the function above, is red bean coffee's business experiencing economies or diseconomies of scale? Explain how you arrived at your answer.
c. If red bean coffee decided to boost labor by 15% and captail by 10%, how much will productivity increase?
d. If red bean coffee wanted to boost productivity by 40% and already knew they were going to increase capital by 20%, how much would they have to increase their labor force to reach this production target?
Joshua StredderLv10
28 Sep 2019
