Log in
Economics
1
answer
0
watching
220
views

Suppose that a production function of a firm is given by Q=min{2L,K}, where Q denotes output, K capital, and L labor. Currently the wage is w=$10, and the rental rate of capital is r=$15.

a. What is the cost and method of producing Q=20 units of capital?

b. Suppose the wage rises to w=$20. If we keep the total cost the same, what level of output can now be produced and what method of production (input mix) is used?

Watch
1
answer
0
watching
220
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Kelleb Mloyi
Kelleb MloyiLv2
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

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.

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?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in