Problem 7.A factory that you are managing has an hourly production process that can be represented by the following CobbDouglas Production function: Q 20KL The price of one unit of capital per hour is $20 and the price of one unit oflabour per hour is $20. You have been instructed to have a total cost of $1,000 or TC $1,000. Find the optimalamount of labour and capital that you will be using, and compute the amount of output..

*Answer: To find the optimal quantity of K (capital) and L (labour), the profit maximising…

las Production function: Q 20KL The price of one unit of capital per hour is $20 and the price of r per hour is $20. You have been instructed to have a total cost of $1,000 or TC-$1,000. Find the o nt of labour and capital that you will be using, and compute the amount of output..

las Production function: Q 20KL The price of one unit of capital per hour is $20 and the price of r per hour is $20. You have been instructed to have a total cost of $1,000 or TC-$1,000. Find the o nt of labour and capital that you will be using, and compute the amount of output..

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Problem 7.
A factory that you are managing has an hourly production process that can be represented by the following Cobb
Douglas Production function: Q 20KL The price of one unit of capital per hour is $20 and the price of one unit of
labour per hour is $20. You have been instructed to have a total cost of $1,000 or TC $1,000. Find the optimal
amount of labour and capital that you will be using, and compute the amount of output..

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