Does output per unit of labor depend only on f

Reference no: EM13203166

According to the chief engineer at the Zodiac Company, Q = ALf Kf , where Q is the output rate, L is the rate of labor input, and K is the rate of capital input. Statistical analysis indicates that f = 0.8 and f = 0.3. The firm's owner claims the plant has increasing returns to scale.

a. Is the owner correct?
b. If f were 0.2 rather than 0.3, would she be correct?
c. Does output per unit of labor depend only on f and Why or why not?

Reference no: EM13203166

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