Cobb-Douglas Productivity Functions Have the Form $p ( x , y ) = k x ^ { a } y ^ { 1 - a }$

question 50

Multiple Choice

Cobb-Douglas productivity functions have the form $p ( x , y ) = k x ^ { a } y ^ { 1 - a }$
Where P stands for the number of items produced per year, x is the number of employees, and y is the annual operating budget. The numbers k and a are constants that depend on the situation we are looking at, with $0 \leq a \leq 1$ .

How many items will be produced per year by a company that has 150 employees and an annual operating budget of $80,000 if $k = 500$ and $a = 0.4$ (Round your answer to one significant digit.)

• A)3245342.2
• B) 4,000,000
• C) 4245342.2
• D) 1,500,000
• E) 3,000,000

---

Definitions:

Ending Capital

Beginning Capital + Additional Investments + Net Income – Withdrawals = Ending Capital. Or: Beginning Capital + Additional Investments – Net Loss – Withdrawals = Ending Capital.

Worksheet

A document used by accountants to gather information from financial statements, adjust and close entries, and prepare financial statements.

Plant, Property

Plant, Property, often followed by and Equipment (PP&E), represents long-term assets owned by a company, used in its operations.

Equipment

Tangible assets used in operations, such as machinery or office equipment, not intended for sale.