6. Duane breeds parrots for a living. He has discovered that the production function for parrot chicks (Q) is: Q =K2 L12 where K is capital (for example nest boxes, cages and the like) and L is parrot food. The price of K is $8 and the price of L is $2. d. Does capital obey the "law of diminishing returns?" Explain. e. Suppose that Duane wants 144 parrot chicks, how much K and L should be employed to minimize costs, and what is the cost of producing 144 parrot chicks? f. Suppose that Duane is faced with the same problem as in (f) except that he has a fixed amount of K. In fact, K= 16. How much L should be employed to minimize costs, and what is the total cost?
6. Duane breeds parrots for a living. He has discovered that the production function for parrot chicks (Q) is: Q =K2 L12 where K is capital (for example nest boxes, cages and the like) and L is parrot food. The price of K is $8 and the price of L is $2. d. Does capital obey the "law of diminishing returns?" Explain. e. Suppose that Duane wants 144 parrot chicks, how much K and L should be employed to minimize costs, and what is the cost of producing 144 parrot chicks? f. Suppose that Duane is faced with the same problem as in (f) except that he has a fixed amount of K. In fact, K= 16. How much L should be employed to minimize costs, and what is the total cost?
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.2P
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning