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Given a production function Q = 20 K0.3 L0.7 where total-(Answered)

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Given a production function Q = 20 K0.3 L0.7 where total expenditure on inputs C = $1,000, cost of capital r = $30 per unit, and cost of labor is w = $10 per unit.

Determine:

a. The amount of labor and capital that maximizes output.

b. The amount of labor and capital that the firm should use to minimize the cost of producing 1,562 units of output, and determine this cost.

c. The effect on the capital/labor ratio from an increase in the unit cost of labor from $10 to $15.

 

Paper#9255504 | Written in 27-Jul-2016

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