Homework Answers
Answer option A.
Production function
Q = K + L/3
Bcoz MP of 1 K, is equivalent of MP of 3L
Now MRTS = MPL/MPK = 1/3
PL/PK = 10/40= 1/4
Now as MRTS > PL/PK
MPL/ PL > MPK/PK
so only L is used in Production,
L*/3 = Q : from Production function
L* = 3Q
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