Consider the following production function;

Question

𝑄(𝐾, 𝐿) = 3𝐾^2/3𝐿^1/3 The firm uses 125.000 K and employs 625 L.

a. What is the production level of this firm?

b. 5 labors want to leave this firm. To maintain initial production level, how much capital does this firm need?

Answer 1

For (a), simply plug the given values for K and L into the equation and compute the answer:

Q = 3(125.000)^2/3(625)^1/3 = ?

For (b), set Q equal to the value you got in (a) and set L to 620, then solve for K.