The Equation Y = a K0

question 5

Multiple Choice

The equation Y = A K0.3L0.7 is known as the ________.

• A) Cobb-Douglas production function
• B) labor supply curve
• C) marginal product of labor
• D) capital-to-employment function

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Definitions:

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market, such as high startup costs, strict regulations, or established brand loyalty.

Economic Profits

The excess of total revenues over total costs, including both explicit costs and opportunity costs, indicating a return beyond the normal profit level.

Accounting Profits

The net earnings of a company as calculated by subtracting total expenses from total revenues, according to standard accounting practices.

Perfect Competitor

A theoretical market structure where many firms sell homogeneous products, entry and exit from the market are free, and all participants have perfect information.