We Manufacturer Automobiles Given the Production Function Q = 5KL

question 59

Multiple Choice

We manufacturer automobiles given the production function q = 5KL where q is the number of autos assembled per eight-hour shift, K is the number of robots used on the assembly line (capital) and L is the number of workers hired per hour (labor) . If we use K = 10 robots and L = 10 workers in order to produce q = 450 autos per shift, then we know that production is:

• A) technologically efficient.
• B) technologically inefficient.
• C) maximized.
• D) optimal.

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Definitions:

Exclusive Use

The right to use a property or product without sharing it with others, often refers to licenses or real estate.

Economies of Scale

Refers to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Consent Decrees

Legal agreements that settle a dispute between two parties without admission of guilt but with an agreement to stop the contested activities.

Marginal Revenue

The additional earnings obtained from selling one more unit of a product or service.