A firm produces output according to the following production function: Q = F (K, L) = 4K + 8L (a) How much output is produced when K = 2 and L = 3? (b) If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost minimizing input mix for producing 24 units of output? (c) If the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour, what is the cost minimizing input mix for producing 24 units of output?
A firm produces output according to the following production function: Q = F (K, L) = 4K + 8L (a) How much output is produced when K = 2 and L = 3? (b) If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost minimizing input mix for producing 24 units of output? (c) If the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour, what is the cost minimizing input mix for producing 24 units of output?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 3MC
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A firm produces output according to the following production function:
Q = F (K, L) = 4K + 8L
(a) How much output is produced when K = 2 and L = 3?
(b) If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost
minimizing input mix for producing 24 units of output?
(c) If the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour,
what is the cost minimizing input mix for producing 24 units of output?
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