Consider the production function Q = Af(K, L). Which of the following statements is (are) TRUE?
A) II
B) I, II, and III
C) II and III
D) I

Question

Consider the production function Q = Af(K, L). Which of the following statements is (are) TRUE? 
A) II 
B) I, II, and III 
C) II and III 
D) I

Quizplus · Accepted Answer

I. This statement is false. The production function can take on various forms and is not limited to Cobb-Douglas.
II. This statement is true. A represents the level of technology in the production function and is held constant in the short run. In the long run, A can be changed through technological advancements.
III. This statement is also true. K and L represent the inputs of capital and labor, respectively, in the production function. While they are assumed to be fixed in the short run, they can be adjusted in the long run.

Consider the Production Function Q = Af(K, L)