complements in a one- EXERCISE 11.6 Suppose capital and to-one ratio. That is, suppose that Q = min (L, K). Currently, the wage is w=5 and the rental rate is r = 10. What is the minimum cost and method of produc ing Q = 20 units of output? Suppose the wage rises to w' = 20. If we keep total cost the same, what level of output can now be produced and what method of production (input mix) is used?
complements in a one- EXERCISE 11.6 Suppose capital and to-one ratio. That is, suppose that Q = min (L, K). Currently, the wage is w=5 and the rental rate is r = 10. What is the minimum cost and method of produc ing Q = 20 units of output? Suppose the wage rises to w' = 20. If we keep total cost the same, what level of output can now be produced and what method of production (input mix) is used?
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.6P
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EXERCISE 11.6 Suppose capital and labour are perfect complements in a one-
to-one ratio. That is, suppose that Q = min (L, K). Currently, the wage is w=5
and the rental rate is r = 10. What is the minimum cost and method of produc
ing Q = 20 units of output? Suppose the wage rises to w' = 20. If we keep total
cost the same, what level of output can now be produced and what method of
production (input mix) is used?
PVER
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