Suppose the Number of Leather Bags Produced by a Certain $x ^ { 1 / 2 }$

question 4

Multiple Choice

Suppose the number of leather bags produced by a certain firm, utilizing x units of raw materials and y units of labor, is given by the formula f(x, y) = 10 $x ^ { 1 / 2 }$ $y ^ { 1 / 2 }$ . What happens to the production of bags if supplies of both raw materials and labor are tripled?

• A) Production is increased by a factor of 6.
• B) Production is increased by a factor of 9.
• C) Production is increased by a factor of 3.
• D) Production is increased by a factor of \(\sqrt { 3 }\) .
• E) none of these

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Definitions:

Misallocation

The inefficient distribution of resources in an economy.

Rationing Coupons

Documents or electronic vouchers used to limit the consumption of resources or goods, particularly during shortages.

Market Price

The market rate at which you can currently buy or sell a service or asset in a specified market.

Equilibrium Price

The market-clearing price where the intentions of buyers and sellers match, leading to an optimal distribution of goods and services.