A Company Has the Cobb-Douglas Production Function , Where

question 71

Multiple Choice

A company has the Cobb-Douglas production function , where x is the number of units of labor, y is the number of units of capital, and z is the units of production. Suppose labor costs $200 per unit, capital costs $150 per unit, and the total cost of labor and capital is limited to $300,000. Find the number of units of labor and the number of units of capital that maximize production. ​

• A) 1,500 units of labor; 2,000 units of capital
• B) 1,200 units of labor; 2,000 units of capital
• C) 1,500 units of labor; 400 units of capital
• D) 1,200 units of labor; 400 units of capital
• E) 12,000 units of labor; 4,000 units of capital

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Definitions:

One-tailed Test

A statistical test that determines the direction of a relationship, testing either for a positive or negative effect but not both.

Two-tailed Test

A statistical hypothesis test in which the area of rejection is on both ends of the sampling distribution, allowing for testing of deviations in both directions.

Generalizability

The extent to which findings from a study can be applied to broader contexts or different groups of people.

Educated Guess

A hypothesis or assumption made based on knowledge and reasoning rather than random guessing.