Assume a Production Function Is Given By $Y = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$

question 20

Multiple Choice

Assume a production function is given by $Y = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$ . If $\bar { A } = 2$
And $\bar { L } = 1$
, and the steady-state capital stock is 8.0, the steady-state level of output is about:

• A) 8.0
• B) 4.0
• C) 45.4
• D) 2.0
• E) 22.6

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Definitions:

Capacity

The maximum level of output that a company can sustain to produce goods or services under a given set of conditions.

Net Loss

The amount by which total expenses exceed total revenues in a company during a specific period, indicating a financial loss.

Discontinue

To discontinue means to stop producing, selling, or providing a product or service, often permanently.

Activity-Based Costing

A costing methodology that assigns costs to products or services based on the resources they consume.