A manufacturer has modeled its yearly production function P (the monetary value of its

Chapter 9, Problem 5

(choose chapter or problem)

A manufacturer has modeled its yearly production function P (the monetary value of its entire production) as a so-called Cobb-Douglas function PsL, Kd 1.47L0.65K 0.35 where L is the number of labor hours (in thousands) and K is the invested capital (in millions of dollars). (a) Find Ps120, 20d and interpret it. (b) If both the amount of labor and the amount of capital are doubled, verify that the production is also doubled.

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