When a production function can be expressed as $$Q = \min \{ a K , B L \}$$ ,the relationship between capital and labor in the production function is that:
A)capital and labor are perfect substitutes, and the isoquants are linear.
B)capital and labor must be combined in fixed proportions, and the isoquants are L-shaped.
C)capital and labor are easily substituted, and the isoquants are convex to the origin.
D)capital and labor are perfect substitutes, and the isoquants are L-shaped.

Question

Quizplus · Accepted Answer

The production function is a case of Leontief production function where the input factors of production (capital and labor) must be used in fixed proportions to produce a fixed output. Therefore, the isoquants are L-shaped. The production function is exhibiting a fixed proportions technology. The output can only increase if both the inputs are increased in the same proportion. Hence, the isoquant will be L-shaped.

When a Production Function Can Be Expressed As Q=min⁡{aK,BL}Q = \min \{ a K , B L \}Q=min{aK,BL}

When a Production Function Can Be Expressed As $Q = \min \{ a K , B L \}$