The Southern Mail produces local newspapers. The company can rent its equipment and hire workers at competitive rates. Equipment needed for this operation can be rented at R1 per hour, and labour can be hired at R2 per worker hour. The production function using available technology can be expressed as Q-2L05 +3K05. The marginal product of labour is given as 1 and the 20.3 3 marginal product of capital is expressed as 2405 a. Determine the firm's optimal ratio of labour to capital. b. Determine the level of capital and labour in the long run if the firm wants to apply a cost constraint of R396. Calculate the output of the firm.

The Southern Mail produces local newspapers. The company can rent its equipment and hire workers at competitive rates. Equipment needed for this operation can be rented at R1 per hour, and labour can be hired at R2 per worker hour. The production function using available technology can be expressed as Q-2L05 +3K05. The marginal product of labour is given as 1 and the 20.3 3 marginal product of capital is expressed as 2405 a. Determine the firm's optimal ratio of labour to capital. b. Determine the level of capital and labour in the long run if the firm wants to apply a cost constraint of R396. Calculate the output of the firm.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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