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18 Sep 2018
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.
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. |
Tod ThielLv2
21 Sep 2018
