The Acme Anvil Company's output is given by the Cobb-Douglas Production function P = 60L2/3K1/3, where P is the number of anvils produced when %3D Lis the amount spent on labor and K is the amount spent on capital.

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Chapter1: Making Economics Decisions
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The Acme Anvil Company's output is given by the Cobb-Douglas Production
function P =
60L2/3 K1/3, where P is the number of anvils produced when
Lis the amount spent on labor and K is the amount spent on capital.
a. What is the production if L = 150 and K = 150?
b. Find the marginal productivities.
C. Evaluate the marginal productivities with L = 150 and K = 150.
d. Interpret the meanings of the marginal productivities found in part c.
e. If their budget is $300 then there is a constraint L+ K = 300. Use
Lagrange multipliers (2) to find the values of L and K that will
maximize production and find the maximum production
f. Find 2. 12| is called the marginal productivity of money and will give
the number additional units produced for each dollar increase in the
budget. Interpret 2 for this problem.
MacBook Pro
urses/34419/files/5014304?wrap=1
Transcribed Image Text:The Acme Anvil Company's output is given by the Cobb-Douglas Production function P = 60L2/3 K1/3, where P is the number of anvils produced when Lis the amount spent on labor and K is the amount spent on capital. a. What is the production if L = 150 and K = 150? b. Find the marginal productivities. C. Evaluate the marginal productivities with L = 150 and K = 150. d. Interpret the meanings of the marginal productivities found in part c. e. If their budget is $300 then there is a constraint L+ K = 300. Use Lagrange multipliers (2) to find the values of L and K that will maximize production and find the maximum production f. Find 2. 12| is called the marginal productivity of money and will give the number additional units produced for each dollar increase in the budget. Interpret 2 for this problem. MacBook Pro urses/34419/files/5014304?wrap=1
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