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? 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 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? 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?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.6P

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A firm produces output according to the production function Q = F(K, L) = 4K + 8L.A. If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what isthe cost-minimizing input mix for producing 32 units of output?
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