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Suppose that we are in there long-run and a firm is choosing K and L to cost minimize. Suppose that as in tutorial: Q = (LK)^0.5. (or also written as Q = (LK)0.5) This implies a Marginal Rate of Technical Substitution (MRTS) that is given by: MRTS = -K/L As in lecture and tutorial and the above question, assume that labour is on the x-axis. Suppose also that the price of labour is equal to $6, the price of capital is equal to $23.

Suppose that we are in there long-run and a firm is choosing K and L to cost minimize. Suppose that as in tutorial: Q = (LK)^0.5. (or also written as Q = (LK)0.5) This implies a Marginal Rate of Technical Substitution (MRTS) that is given by: MRTS = -K/L As in lecture and tutorial and the above question, assume that labour is on the x-axis. Suppose also that the price of labour is equal to $6, the price of capital is equal to $23.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that we are in there long-run and a firm is choosing K and L to cost minimize. Suppose that as in tutorial: Q = (LK)^0.5. (or also written as Q = (LK)0.5) This implies a Marginal Rate of Technical Substitution (MRTS) that is given by: MRTS = -K/L As in lecture and tutorial and the above question, assume that labour is on the x-axis. Suppose also that the price of labour is equal to $6, the price of capital is equal to $23. The firm receives an order for 222 units of output, and wants to find a way to minimize its costs of producing this output. How much capital will the firm need to use if it wants to fulfill this order and is cost minimizing? Note: round your answers to two decimal places.
Transcribed Image Text:Suppose that we are in there long-run and a firm is choosing K and L to cost minimize. Suppose that as in tutorial: Q = (LK)^0.5. (or also written as Q = (LK)0.5) This implies a Marginal Rate of Technical Substitution (MRTS) that is given by: MRTS = -K/L As in lecture and tutorial and the above question, assume that labour is on the x-axis. Suppose also that the price of labour is equal to $6, the price of capital is equal to $23. The firm receives an order for 222 units of output, and wants to find a way to minimize its costs of producing this output. How much capital will the firm need to use if it wants to fulfill this order and is cost minimizing? Note: round your answers to two decimal places.
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