A firm uses labor (L) and capital (K) to produce rocking chairs (Q) with the following production function Q=LK. The wage (w) is $10 and the rate of capital (r) is $20. The target number of rocking chairs to produce is 800. It is the short run and the amount of K is fixed at 5. What the optimal values for L* and K* in the short run?
A firm uses labor (L) and capital (K) to produce rocking chairs (Q) with the following production function Q=LK. The wage (w) is $10 and the rate of capital (r) is $20. The target number of rocking chairs to produce is 800. It is the short run and the amount of K is fixed at 5. What the optimal values for L* and K* in the short run?
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQ
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A firm uses labor (L) and capital (K) to produce rocking chairs (Q) with the following production function Q=LK. The wage (w) is $10 and the rate of capital (r) is $20. The target number of rocking chairs to produce is 800.
It is the short run and the amount of K is fixed at 5. What the optimal values for L* and K* in the short run?
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