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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)
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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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.
Transcribed Image Text: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.
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