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.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 1.1CE

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