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1. Firm A produces video contents using digital editing equipment (K) and employed editors (L), where Q in the number of videos. The wage for editor is $25, and the rental rate on equipment is $50. The firm wants to produce 3, 000 videos at the lowest possible cost. Suppose the production function of this firm is below- Q = 30 K^0.6 L^0.4 a. Solve cost minimization problem. b. What is the total cost associated with the output a firm wants to produce? c. Illustrate the result from part (a) and (b). You should draw isoquant line and isocost line. Isoquant line has a shape of the curve convex toward origin.

1. Firm A produces video contents using digital editing equipment (K) and employed editors (L), where Q in the number of videos. The wage for editor is $25, and the rental rate on equipment is $50. The firm wants to produce 3, 000 videos at the lowest possible cost. Suppose the production function of this firm is below- Q = 30 K^0.6 L^0.4 a. Solve cost minimization problem. b. What is the total cost associated with the output a firm wants to produce? c. Illustrate the result from part (a) and (b). You should draw isoquant line and isocost line. Isoquant line has a shape of the curve convex toward origin.

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.1P
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1. Firm A produces video contents using digital editing equipment (K) and employed editors (L), where Q in the number of videos. The wage for editor is $25, and the rental rate on equipment is $50. The firm wants to produce 3, 000 videos at the lowest possible cost. Suppose the production function of this firm is below- Q = 30 K^0.6 L^0.4 a. Solve cost minimization problem. b. What is the total cost associated with the output a firm wants to produce? c. Illustrate the result from part (a) and (b). You should draw isoquant line and isocost line. Isoquant line has a shape of the curve convex toward origin.
Transcribed Image Text:1. Firm A produces video contents using digital editing equipment (K) and employed editors (L), where Q in the number of videos. The wage for editor is $25, and the rental rate on equipment is $50. The firm wants to produce 3, 000 videos at the lowest possible cost. Suppose the production function of this firm is below- Q = 30 K^0.6 L^0.4 a. Solve cost minimization problem. b. What is the total cost associated with the output a firm wants to produce? c. Illustrate the result from part (a) and (b). You should draw isoquant line and isocost line. Isoquant line has a shape of the curve convex toward origin.
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