Question

interpret the production function q=(LK)^.5

what does this say about your use of labor and capital?

Answer 1

Production function

Production function is a mathematical function which indicates the maximum amount of output which can be derived with the given number of inputs namely labor and capital.

Q = (LK)^.5

Where

Q = Quantities of output

L = Labor

K = Capital

This expression may be further expressed as

Q = L^0.5 K^0.5

The above production function is known as the Cobb Douglas production function. This function indicates that 5 units of output can be produced by inducing  5 units of labor and 5 units of capital. The firm could also produce 5 units of output with 5 units of labor and only one unit of capital. This production function states that least amount of inputs is only required where the combination of inputs would be relatively equal.