The production of a product is characterised by the function f(x, y) = 16x'/4y³/4, where x is the number of units of labour and y is the number of units of capital needed to produce f(x, y) units of the product. Each unit of labour costs £50 and each unit of capital costs £100. You are given a budget of £500,000 and are asked to calculate the number of units of labour that maximise the production. Enter your answer as an integer.

The production of a product is characterised by the function f(x, y) = 16x'/4y³/4, where x is the number of units of labour and y is the number of units of capital needed to produce f(x, y) units of the product. Each unit of labour costs £50 and each unit of capital costs £100. You are given a budget of £500,000 and are asked to calculate the number of units of labour that maximise the production. Enter your answer as an integer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

The production of a product is characterised by the function
f(x, y) = 16x/4y3/4,
where x is the number of units of labour and y is the number of units of capital
needed to produce f(x, y) units of the product. Each unit of labour costs £50 and
each unit of capital costs £100. You are given a budget of £500,000 and are asked to
calculate the number of units of labour that maximise the production. Enter your
answer as an integer.
Answer:

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