An enterprise wants to produce exactly 42 units of product at the lowest possible cost. The enterprise uses K units of capital and L units of labor. The production function is: 1 1 q(K, L) = K²² The cost function includes the capital and labor costs. The capital cost is r = 1 * * and the wage rate is w = 20. We need to calculate the optimal quantities K,L that solve the problem Using the method of Lagrange.
An enterprise wants to produce exactly 42 units of product at the lowest possible cost. The enterprise uses K units of capital and L units of labor. The production function is: 1 1 q(K, L) = K²² The cost function includes the capital and labor costs. The capital cost is r = 1 * * and the wage rate is w = 20. We need to calculate the optimal quantities K,L that solve the problem Using the method of Lagrange.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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