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A cost-minimizing firm's production is given by Q=LK

When w=$4 and r=$2, the firm's total costs are $160. When input price changes such that the wage rate is 8 times the rental rate, the firm adjusts its input combination but leaves total output unchanged. What would be the cost-minimizing input combination after the price change?

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019
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Related questions

Please, provide all the steps... I need to be able to do this on my own after you show me. Thank you!

A firm produces output according to the production function:

Q = F(K,L) = 4K + 8L.

a. How much output is produced when K = 2 and L = 3?

b. If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost-minimizing input mix for producing 32 units of output?

Capital: ?
Labor: ?

c. If the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour, what is the cost-minimizing input mix for producing 32 units of output?

Capital: ?
Labor: ?

A firm produces output according to a production function Q = F (K, L) = min {4K, 8L}.

a. How much output is produced when K = 2 and L = 3?

b. If the wage rate is $ 60 per hour and the rental rate on capital is $ 20 per hour, what is the cost- minimizing input mix for producing 8 units of output?

c. How does your answer to part b change if the wage rate decreases to $ 20 per hour but the rental rate on capital remains at $ 20 per hour?

A firm produces output according to a production function:

Q = F(K,L) = min {2K,2L}.

a. How much output is produced when K = 2 and L = 3?




b. If the wage rate is $65 per hour and the rental rate on capital is $35 per hour, what is the cost-minimizing input mix for producing 4 units of output?

Capital:
Labor:


c. How does your answer to part b change if the wage rate decreases to $35 per hour but the rental rate on capital remains at $35 per hour?

Capital and labor increase.
Capital decreases and labor increases.
It does not change.
Capital increases and labor decreases.

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