Charlie's Umbrellas has a production function given by Q = L0.5K0.5. The wage (W) is $80 per day and the rental per unit of capital (R) is $5 per day. In the long run, how many units of capital will Charlie want to buy for each unit of labor?

Charlie's Umbrellas has a production function given by Q = L0.5K0.5. The wage (W) is $80 per day and the rental per unit of capital (R) is $5 per day. In the long run, how many units of capital will Charlie want to buy for each unit of labor?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 16P

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Question

Charlie's Umbrellas has a production function
given by Q = L0.5K0.5. The wage (W) is $80 per
day and the rental per unit of capital (R) is $5 per
day. In the long run, how many units of capital will
Charlie want to buy for each unit of labor?

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