The following production function and cost constraints are given find the values of L, K and 2 by using Ist order and 2nd order conditions where the firm is in equilibrium i,e maximizes oútput subject to cost constraints. Use substitution or T Lagrange method. i) Production function: Q = LK Cost function: PK = 5, PL = 2, C = 100 [ Ans. L = 25, K = 10, A = 5] %3D %3D ii) Production function: Q = LK + L K = 10 [ Ans. L = 28/3, K = 27, 2 = 14/3] %3! Pr = 6, PK = 2, C = 110 %3D 2.
The following production function and cost constraints are given find the values of L, K and 2 by using Ist order and 2nd order conditions where the firm is in equilibrium i,e maximizes oútput subject to cost constraints. Use substitution or T Lagrange method. i) Production function: Q = LK Cost function: PK = 5, PL = 2, C = 100 [ Ans. L = 25, K = 10, A = 5] %3D %3D ii) Production function: Q = LK + L K = 10 [ Ans. L = 28/3, K = 27, 2 = 14/3] %3! Pr = 6, PK = 2, C = 110 %3D 2.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![The following production function and cost constraints are given find the yalues
of L, K and 2 by using Ist order and 2nd order conditions where the firm is in
equilibrium i,e maximizes oútput subject to cost constraints. Use substitution or
19 Lagrange method.
2.
i)
Production function: Q = LK
Cost function: PK = 5, PL = 2, C = 100
[ Ans. L = 25, K = 10, 1 = 5]
ii)
Production function: Q=LK +L K = 10
PL = 6, PK = 2, C = 110
[ Ans. L = 28/3, K = 27, A = 14/3]
%3D](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F26397c18-d973-496e-81c5-4f651c8a23d0%2Fde4b5cba-3776-4a12-a4fa-2f79e8521515%2Fylatp3i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The following production function and cost constraints are given find the yalues
of L, K and 2 by using Ist order and 2nd order conditions where the firm is in
equilibrium i,e maximizes oútput subject to cost constraints. Use substitution or
19 Lagrange method.
2.
i)
Production function: Q = LK
Cost function: PK = 5, PL = 2, C = 100
[ Ans. L = 25, K = 10, 1 = 5]
ii)
Production function: Q=LK +L K = 10
PL = 6, PK = 2, C = 110
[ Ans. L = 28/3, K = 27, A = 14/3]
%3D
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 2 steps
![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
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
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 & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education