In the standard notation for a two-input Leontief production function, K denotes capital. What does L denote?
Quantity of labour input
L denotes labour input. In a Leontief technology, output is limited by the input available in the smallest amount relative to its required fixed proportion. Labour is therefore not necessarily the binding input; that depends on the quantities of labour and capital.
Important Questions from Production Function
For the following two statements of Assertion (A) and Reasoning (R) suggest the correct code:
Assertion (A): Low initial price regarded as the principal means for entering into mass market for some new products.
Reasoning (R): Firms generally enter into production of new products with excess capacity of the plant initially.
Code:
Indicate the correct code from the following types of the long run average cost curves on which the minimum average cost of production in long run can be determined:
(i) Long run average cost curve under normal production function
(ii) Long run average cost curve under linearly homogeneous production function
(iii) Planning curve
(iv) Envelope curve
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Which of the following is not an attribute of production function?
- Match the stages of production with their corresponding characteristics :
(i) Stage-I (a) Total product declines, Marginal product is negative (ii) Stage-II (b) Total product increases at an increasing rate, marginal product positive (iii) Stage-III (c) Total product increases at a diminishing rate, marginal product is zero. - Neo-classical production function has which of the following characteristics ?
(a) Positive and diminishing marginal productivities of the factors
(b) Constant returns to scale
(c) Satisfies Inada conditions
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