Suppose that a certain factory output is given by the Cobb-Douglas production function Q(K, L) = 60K¹/3 [2/3 units, where K is the level of capital and L the size of the labor force need to maximize the factory's output. (a) Determine whether the Cobb-Douglas production function is concave, convex, strictly concave, strictly convex or neither. If a unit of labour costs $100, unit of capital $200, and $200,000 is budgeted for production (b) Formulate the problem as a constrained optimization problem. (c) Write down the Lagrange function.

Suppose that a certain factory output is given by the Cobb-Douglas production function Q(K, L) = 60K¹/3 [2/3 units, where K is the level of capital and L the size of the labor force need to maximize the factory's output. (a) Determine whether the Cobb-Douglas production function is concave, convex, strictly concave, strictly convex or neither. If a unit of labour costs $100, unit of capital $200, and $200,000 is budgeted for production (b) Formulate the problem as a constrained optimization problem. (c) Write down the Lagrange function.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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