20. Consider the production function Q = 6K/3L/2, where Q, K, and L denotethe quantities of output, capital, and labor. Suppose that the price of a unitof output is p= 4, the rental cost of capital is r 0.16, and the wage rate isw = 12. The profit-maximizing values of K and L are(a) K = 250000, L =1250(b) K = 1250, L = 250000(c) K = 25000, L= 12500(d) K = 2500, L = 125000(e) K = 125000, L = 2500

Profit = TR – TC TR = P*Q TC= wL + r K w = 12, r = 0.16, so, TC= 12L + 0.16 K The profit function as…

Consider the production function Q = 6K//3L/2, where Q, K, and L denote the quantities of output, capital, and labor. Suppose that the price of a unit of output is p = 4, the rental cost of capital is r = 12. The profit-maximizing values of K and L are 0.16, and the wage rate is %3D (a) K = 250000, L = 1250 %3D (b) K = 1250, L = 250000 %3D (c) K 25000, L = 12500 (d) K = 2500, L = 125000 %3D (e) K = 125000, L = 2500 %3D

Consider the production function Q = 6K//3L/2, where Q, K, and L denote the quantities of output, capital, and labor. Suppose that the price of a unit of output is p = 4, the rental cost of capital is r = 12. The profit-maximizing values of K and L are 0.16, and the wage rate is %3D (a) K = 250000, L = 1250 %3D (b) K = 1250, L = 250000 %3D (c) K 25000, L = 12500 (d) K = 2500, L = 125000 %3D (e) K = 125000, L = 2500 %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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