RBW produces light sticks for one of their legendary girl groups, Kara. Suppose that RBWuses capital, K, and labor, L, to produce the light sticks. The production function is given as: Q(K,L)=2K0.75L0.51. Identify if RBW’s production function is increasing, constant, or decreasing returns to scale with a brief explanation. Also, solve for the company’s cost minimization problem by providing conditional demand functions of labor and capital, with respect to their input prices. Assume that w is the wage of labor and r is the rent cost of capital.2. Suppose that RBW is preparing for a mini-fan meet for the group’s “When I move” mini-album launch and that they have to provide 200 light sticks. The wage of labor, w, is $6.00 and the cost of capital, r, is $2.00. Determine how much labor and capital they have to use and the total cost of producing the light sticks.
RBW produces light sticks for one of their legendary girl groups, Kara. Suppose that RBW
uses capital, K, and labor, L, to produce the light sticks. The production function is given as: Q(K,L)=2K0.75L0.5
1. Identify if RBW’s production function is increasing, constant, or decreasing returns to scale with a brief explanation. Also, solve for the company’s cost minimization problem by providing conditional demand functions of labor and capital, with respect to their input prices. Assume that w is the wage of labor and r is the rent cost of capital.
2. Suppose that RBW is preparing for a mini-fan meet for the group’s “When I move” mini-album launch and that they have to provide 200 light sticks. The wage of labor, w, is $6.00 and the cost of capital, r, is $2.00. Determine how much labor and capital they have to use and the total cost of producing the light sticks.
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