the quantity, q, of a product manufactures depends on the number of workers. W , and the amount of capital invested, K, and is represented by the Cobb-Douglas function q = 64W^3/4 K^1/4 . Suppose further that labor costs $18 per worker and capital costs $28 per unit, and the budget is $4600. Let λ be the Lagrange multiplier. Does increasing

Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.6: Permutations
Problem 5E
icon
Related questions
Question

 the quantity, q, of a product manufactures depends on the number of workers.
W , and the amount of capital invested, K, and is represented by the Cobb-Douglas
function
q = 64W^3/4 K^1/4 .
Suppose further that labor costs $18 per worker and capital costs $28 per unit, and the
budget is $4600. Let λ be the Lagrange multiplier. Does increasing the budget by $1 allow the
production of λ extra units of the product? Explain why as shown in the image below..

(W- 84 (41.08)
18
W. 191.7
4. 7. 44.5 kģ
7-44.5
4
18W 14
Q = 64 w 3/4 K 1/4
k
16 (3) (41.07)
18(191.47) 14
(1.81)
4601 = 64 (191.76)
64 (191.76) 014. (41.08) 74
4400
V
=
8347.78
64 (1967) 54 (91-08)/4
= 8345.97
.
= 11.81
8347-78-8345.97 =
1-81=1.81
Transcribed Image Text:(W- 84 (41.08) 18 W. 191.7 4. 7. 44.5 kģ 7-44.5 4 18W 14 Q = 64 w 3/4 K 1/4 k 16 (3) (41.07) 18(191.47) 14 (1.81) 4601 = 64 (191.76) 64 (191.76) 014. (41.08) 74 4400 V = 8347.78 64 (1967) 54 (91-08)/4 = 8345.97 . = 11.81 8347-78-8345.97 = 1-81=1.81
Expert Solution
steps

Step by step

Solved in 4 steps with 5 images

Blurred answer
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question

Does the value of λ change if the budget changes from $4600 to $5600?
What condition must a Cobb-Douglas production function q = cKαW β satisfy to
ensure that the marginal increase of production is not affected by the size of the
budget?

Solution
Bartleby Expert
SEE SOLUTION
Recommended textbooks for you
Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
Algebra
ISBN:
9781133382119
Author:
Swokowski
Publisher:
Cengage