A firm produces output according to a production function: Q = F(K,L) = min {6K,2L}. a. How much output is produced when K = 2 and L = 3? unit(s) b. If the wage rate is $45 per hour and the rental rate on capital is $25 per hour, what is the cost-minimizing input mix for producing 6 units of output?
A firm produces output according to a production function: Q = F(K,L) = min {6K,2L}. a. How much output is produced when K = 2 and L = 3? unit(s) b. If the wage rate is $45 per hour and the rental rate on capital is $25 per hour, what is the cost-minimizing input mix for producing 6 units of output?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 19PAE
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Question
A firm produces output according to a production function:
Q = F(K,L) = min {6K,2L}.
a. How much output is produced when K = 2 and L = 3?
unit(s)
b. If the wage rate is $45 per hour and the rental rate on capital is $25 per hour, what is the cost-minimizing input mix for producing 6 units of output?
Capital:
Labor:
c. How does your answer to part b change if the wage rate decreases to $25 per hour but the rental rate on capital remains at $25 per hour?
-
Capital decreases and labor increases.
-
Capital and labor increase.
-
It does not change.
-
Capital increases and labor decreases.
Only typed answer
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