Consider a profit-maximising firm with a production technology that can be represented by the production function f(L, K) = VLK. Suppose that the firm is a price taker that faces a wage-rate for labour of $10 per unit and a rental-rate for capital of $15 per unit. In what proportions should the firm use labour and capital?

Consider a profit-maximising firm with a production technology that can be represented by the production function f(L, K) = VLK. Suppose that the firm is a price taker that faces a wage-rate for labour of $10 per unit and a rental-rate for capital of $15 per unit. In what proportions should the firm use labour and capital?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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