Suppose that a firm produces tables according to the production function Q = 2K6L.4. Wages (w) are $30 per hour and the unit cost of capital (r) is $60 per hour. What is the cost minimizing input combination that can produce Q = 1200 tables? What is the value of total cost? How would your answer change if r decreases to $45 per hour? (Resolve the model and determine the change in total cost).
Suppose that a firm produces tables according to the production function Q = 2K6L.4. Wages (w) are $30 per hour and the unit cost of capital (r) is $60 per hour. What is the cost minimizing input combination that can produce Q = 1200 tables? What is the value of total cost? How would your answer change if r decreases to $45 per hour? (Resolve the model and determine the change in total cost).
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section12.4: Costs In The Short Run And In The Long Run
Problem 4QQ
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