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The short-run production function of ACME Widgets Inc. is given by q = 40(2L − 8)^(3/4 ,
where q is the number of Widgets ACME produces in a month, and ` is ACME’s monthly labor input, measured in $1000’s.
a. Find ACME’s labor-elasticity of output as a function of `.
b. What is the labor-elasticity of output when monthly labor input is ` = 12?
c. Use your answer to b. to estimate the percentage change in output if ACME increases its labor input from $12,000.00 to $12,600.00.
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