You are running a small factory that uses labour (L) and capital (K) to produce output (Q). Your production function is Q space equals space 10 L to the power of bevelled 1 half end exponent K to the power of bevelled 1 half end exponent For every unit of labour you use you have to pay a wage of w - $ 20 and for every unit of capital you use you have to pay a rental rate of r = $5. You've signed a contract that you will produce Q-700 units of output. If you minimize your costs, what amount of labour (L) should you use?

You are running a small factory that uses labour (L) and capital (K) to produce output (Q). Your production function is Q space equals space 10 L to the power of bevelled 1 half end exponent K to the power of bevelled 1 half end exponent For every unit of labour you use you have to pay a wage of w - $ 20 and for every unit of capital you use you have to pay a rental rate of r = $5. You've signed a contract that you will produce Q-700 units of output. If you minimize your costs, what amount of labour (L) should you use?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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0.250.75 Suppose that a firm had a production function given by: q=LK (r) is $5. The wage rate (w) is $10 and the rental rate Calculate the amount of labor the firm would hire when it produces 400 units of output in a cost-minimizing way. (Round to the nearest 2 decimal places if necessary.) Answer:
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Lesson 8 - Costs Question 6
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