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

question 47

Multiple Choice

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

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

Identify the distribution of tax burdens between buyers and sellers.

Analyze the effect of taxes on consumer and producer surplus.

Determine the outcome of different types of market interventions like price ceilings and price floors.

Interpret graphical representations of market supply and demand shifts due to taxes and price controls.

---

Definitions:

Indirect Material

Materials used in the production process but not directly traceable to a finished product, such as lubricants for machinery.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.

Safety Margin

The difference between the actual sales and the break-even point; it measures the amount by which sales can drop before a business incurs a loss.

Automated Firm

An enterprise that employs advanced technologies and systems such as artificial intelligence, robotics, and sophisticated software to minimize human intervention in its operations.