Which of the following profit functions exhibits a Leontief production function? A) π = P × K^0.75L^0.50 - 20L - 35K B) π = P × min(2L, 5K) - 20L - 35K C) π = P × (3K + 4L) - 20L - 35K D) π = P × (3K^0.5 + 4L^0.5)^1/0.2 - 20L - 35K

Question

Quizplus · Accepted Answer

A Leontief production function assumes that the production output is limited by the minimum amount of input factors available. In option B, the profit function is based on the minimum of 2L and 5K, which indicates a fixed proportion between the two inputs, consistent with a Leontief production function. The other options do not exhibit a fixed proportion between inputs and thus do not conform to a Leontief production function.

Which of the Following Profit Functions Exhibits a Leontief Production