Which of the Following Profit Functions Exhibits a Cobb-Douglas Production $\pi$

question 45

Multiple Choice

Which of the following profit functions exhibits a Cobb-Douglas production function?

• A)\(\pi\) = P x K^0.75L^0.50 - 20L - 35K.
• B)\(\pi\) = P x min(2L, 5K) - 20L - 35K.
• C)\(\pi\) = P x (3K + 4L) - 20L - 35K.
• D)\(\pi\) = P x (3K^0.5 + 4L^0.5) ^1/0.2 - 20L - 35K.

---

Definitions:

Convertible Bond

A type of corporate bond that can be converted into a pre-specified amount of the issuing company's equity at certain times during its life, usually at the discretion of the bondholder.

Bond Principal

The face value of a bond, or the amount of money the issuer promises to repay the bondholder at the time of maturity, not including interest payments.

Real Rate

The inflation-adjusted interest rate, representing the actual cost of borrowing or the genuine return on an investment.

Buying Power

The amount of goods or services that can be purchased with a unit of currency or by consumers, reflecting the value of money.