Suppose a Cobb-Douglas Production function is given by the function: P(L, K) = 22L0.4K0.6 Furthermore, the cost function for a facility is given by the function: C(L, K) = 500L + 200K Suppose the monthly production goal of this facility is to produce 6,000 items. In this problem, we will assume L represents units of labor invested and K represents units of capital invested, and that you can invest in tenths of units for each of these. What allocation of labor and capital will minimize total production Costs? Units of Labor L = (Show your answer is exactly 1 decimal place) Units of Capital K = (Show your answer is exactly 1 decimal place) Also, what is the minimal cost to produce 6,000 units? (Use your rounded values for L and K from above to answer this question.) The minimal cost to produce 6,000 units is $
Suppose a Cobb-Douglas Production function is given by the function: P(L, K) = 22L0.4K0.6 Furthermore, the cost function for a facility is given by the function: C(L, K) = 500L + 200K Suppose the monthly production goal of this facility is to produce 6,000 items. In this problem, we will assume L represents units of labor invested and K represents units of capital invested, and that you can invest in tenths of units for each of these. What allocation of labor and capital will minimize total production Costs? Units of Labor L = (Show your answer is exactly 1 decimal place) Units of Capital K = (Show your answer is exactly 1 decimal place) Also, what is the minimal cost to produce 6,000 units? (Use your rounded values for L and K from above to answer this question.) The minimal cost to produce 6,000 units is $
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
Related questions
Question
![Question 3
Suppose a Cobb-Douglas Production function is given by the function: P(L, K) = 22L0.4K0.6
Furthermore, the cost function for a facility is given by the function: C(L, K) = 500L + 200K
Suppose the monthly production goal of this facility is to produce 6,000 items. In this problem, we will
assume L represents units of labor invested and K represents units of capital invested, and that you can
invest in tenths of units for each of these. What allocation of labor and capital will minimize total
production Costs?
Units of Labor L =
Units of Capital K =
(Show your answer is exactly 1 decimal place)
Also, what is the minimal cost to produce 6,000 units? (Use your rounded values for L and K from above to
answer this question.)
The minimal cost to produce 6,000 units is $
Hint:
(Show your answer is exactly 1 decimal place)
1. Your constraint equation involves the Cobb Douglas Production function, not the Cost function.
2. When finding a relationship between L and K in your system of equations, remember that you will
want to eliminate A to get a relationship between L and K.
3. Round your values for L and K to one decimal place (tenths).
Question Help: Video](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9c62a616-6a2f-456f-ac81-c6090d5022b3%2F0951a84c-b983-47d4-b8d3-f6b6f8bb2418%2Fftwl85k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 3
Suppose a Cobb-Douglas Production function is given by the function: P(L, K) = 22L0.4K0.6
Furthermore, the cost function for a facility is given by the function: C(L, K) = 500L + 200K
Suppose the monthly production goal of this facility is to produce 6,000 items. In this problem, we will
assume L represents units of labor invested and K represents units of capital invested, and that you can
invest in tenths of units for each of these. What allocation of labor and capital will minimize total
production Costs?
Units of Labor L =
Units of Capital K =
(Show your answer is exactly 1 decimal place)
Also, what is the minimal cost to produce 6,000 units? (Use your rounded values for L and K from above to
answer this question.)
The minimal cost to produce 6,000 units is $
Hint:
(Show your answer is exactly 1 decimal place)
1. Your constraint equation involves the Cobb Douglas Production function, not the Cost function.
2. When finding a relationship between L and K in your system of equations, remember that you will
want to eliminate A to get a relationship between L and K.
3. Round your values for L and K to one decimal place (tenths).
Question Help: Video
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 7 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics: Applications, Strategies an…](https://www.bartleby.com/isbn_cover_images/9781305506381/9781305506381_smallCoverImage.gif)
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
![Microeconomics: Principles & Policy](https://www.bartleby.com/isbn_cover_images/9781337794992/9781337794992_smallCoverImage.jpg)
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
![Economics:](https://www.bartleby.com/isbn_cover_images/9781285859460/9781285859460_smallCoverImage.gif)