Always Round Tire Has a Production Function of Q =

question 37

Essay

Always Round Tire has a production function of Q = 300 L^.75 K^.5.If Always Round Tire doubles the size of its production facility-increasing L from 250 to 500 and K from 25 to 50 -what happens to the cost of production,even though we do not know the wages of labor or the price of capital?

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Definitions:

Regression

A statistical method used for estimating the relationships among variables, often to predict the value of a dependent variable based on the values of one or more independent variables.

F Statistic

A ratio used in statistics to compare the variability between group means to the variability within groups, central in conducting ANOVAs.

Hypotheses

Plural of hypothesis; propositions or sets of propositions put forth to explain certain phenomena, subject to verification or falsification through testing.

Forbes 500 List

An annual ranking by Forbes magazine of the 500 largest corporations in the U.S. based on their revenue.