Questions tagged [production-function]

A function whose value is the produced quantity associated with a given vector of factor inputs. The production function represents the technology available to the firm.

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51 views

Substitutive or supportive factors of production

Given the function: $y=A K^\alpha L^\beta, A,\alpha,\beta >0$ $y=aK+bL^{0.5}, a,b>0$ Decide whether capital and labour are substitute or supportive factors of production. How to solve this ...
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Given Cobb-Douglas production functions for 2 factories (same owner), how will the owner produce $y$?

So my question is this: A company owns two factories, A and B, each with the following production functions: $f_A(x_1,x_2)=x_1^{\alpha}x_2^{1-\alpha}$ $f_B(x_1,x_2)=x_1^{\beta}x_2^{1-\beta}$ Now ...
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Total cost function and (dis)economies of scale

I'm really confused about how I'd tackle this. I have an equation, $TC(Q) = 100Q + 20Q^2 + 3Q^3$. And I'm trying to find where the economies of scale, diseconomies of scale and constant return to ...
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Can capital still be paid its marginal product in the absence of a homogeneous capital stock?

Thomas Piketty's best-selling book on inequality, "Capital in the Twenty-First Century" has attracted a lot of criticism on the right for its data analysis. Less well-known, however, is the criticism ...
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Kimball (1995) Specification of Final Good Production

Kimball (1995) defines production of the final good ($Y$) with intermediate goods $y_l$ in his equation (1) as $$ 1 = \int_0^1 G\left(\frac{y_l}{Y}\right) dl $$ with $G(1) = 1$, $G'(x) > 0$ and $...
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Finding economy's factor price for perfect complement production function

Q.Consider an economy producing a single good by a production function $$Y = min [K, L]$$ where Y is the output of the final good. K and L are input use of capital and labour respectively. Suppose ...
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Financial investment in the composition of GDP

In the production function Y = C + I + G + NX Does foreign investment in domestic assets (i.e. foreign buying of domestic bonds) - and vice versa - come under the Net Exports variable? Which ...
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Marginal product versus marginal productivity in a Cobb-Douglas production function [closed]

CFA Kaplan Schweser claim that Cobb-Douglas function exhibits constant marginal product of capital but diminishing marginal productivity of capital. I think this statement is not right. My view ...
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factors of production (and their relative contribution)

I am reading mankiw's intermediate economics text. what i find is that when he writes a production function for how much will be produced in an economy. he says it is dependent upon quantity of inputs ...
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Determining cost from production function, wage, and rental rate

So I have a production function $Q=2K + 20L^{1/2}$ and I suppose the wage is $w=5$ and the rental rate is $r=9$. I want to find the long-run cost of production, which I know is constrained by $\frac{...
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Lessons From Successfully small island economies

What economic and development lessons/strategies can developing Caribbean countries learn from successfully small island nations like Singapore?
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China's Prosperity

This is my first time doing this but with respects to economic prosperity. What are some of the tools/strategies that Chinese leader such as Deng Xiaoping would have used to stimulate and enhance ...
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Real world production-possibility frontier example?

I'm reading an economics textbook and trying to make sense of PPF (or PPC) concept. All examples I could find are like producing computers vs food. I can't understand how it can be evaluated and ...
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How do you find marginal revenue if you don't have a production function?

I was given a word problem. No formulas. So I set up the following equations: Demand Function \begin{equation} D(p) = a - p \end{equation} Cost Function: \begin{equation} c(q) = 9 + 10q \end{...
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What is Production Possibility Frontier (PPF) diagram drawn on consumption-leisure?

When explaining basic macroeconomics model involving consumption-leisure tradeoff, often diagram showing production possbility frontier (PPF) is drawn with leisure on x-axis and consumption on y-axis. ...
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How to derive firm's cost function from production function?

I recently learned how to solve the following type of problem using the method of Lagrangian multipliers: Given a consumer with utility function $u(x,y)$, wealth $w$, prices $p =(p_x,p_y)$, budget ...
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How does inflation impact the welfare of the economy?

When the government causes inflation through printing money, the individuals who saved their money in the bank are poorer. Is there a way to determine how different inflation rates impact the welfare ...
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With OPEC driving the prices of oil down, can American producers simply store oil produced at higher cost to sell later? [closed]

I have been wondering. With OPEC driving down the price of oil in order to stifle the growth of the American oil industry, what can we do about it? More specifically, why don't these oil producers ...
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Growth Accounting

In growth accounting the production function is defined as follows: $$Y= AF(K,L) $$ That means output $Y$ is dependent upon capital $K$, labour $L$ and technology $A$. Now to produce something, in ...
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How can I obtain Leontief and Cobb-Douglas production function from CES function?

In most Microeconomics textbooks it is mentioned that the Constant Elasticity of Substitution (CES) production function, $$Q=\gamma[a K^{-\rho} +(1-a) L^{-\rho} ]^{-\frac{1}{\rho}}$$ (where the ...