In the Production Function $Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$

question 116

Multiple Choice

In the production function $Y = F ( K , L ) = \bar { A } \bar { K } ^ { 1 / 3 } L ^ { 2 / 3 }$ , $\bar { A }$
Represents:

• A) an unknown
• B) the amount of capital in an economy
• C) the amount of labor in an economy
• D) a productivity parameter
• E) an error term

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Definitions:

Labor

The human effort (physical or mental) that is used in the production of goods and services.

Producer Surplus

The difference between the actual amount producers receive for a good and the minimum amount they would be willing to accept.

Firm

A business enterprise or establishment engaged in commercial, industrial, or professional activities.

Normal Good

A type of good for which demand increases when consumer income rises, and falls when consumer income decreases.