Question #77186

on the basis of the following production function Q=AK4/5L1/5 write down the general mathematical form of the demand function deriving from this form of technology in the case of a profit maximizing firm

Expert's answer

Q=AK4/5L1/5

A linear demand curve can be plotted using the following equation. Qd = a â€“ b(P).

The inverse demand equation can also be written as P = a -b(Q), where a = intercept where price is 0, b = slope of demand curve.

So, P = a - b*AK4/5L1/5.

A linear demand curve can be plotted using the following equation. Qd = a â€“ b(P).

The inverse demand equation can also be written as P = a -b(Q), where a = intercept where price is 0, b = slope of demand curve.

So, P = a - b*AK4/5L1/5.

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