Q = 100 K^0.5L^0.5 L= 100 units, K = 25 units (i) What is the MPL and MPK based on the input rates? (ii) If the rental price of land was Rs. 20/= for unit, what was the wage rate? (iii) Suppose that the rental price of capital is expected to increased to Rs. 25/= while the wage rate and labour inputs will remain unchanged under the terms of labour contract. If the firm maintain efficient production what input rate of land will be used? www www

Q = 100 K^0.5L^0.5 L= 100 units, K = 25 units (i) What is the MPL and MPK based on the input rates? (ii) If the rental price of land was Rs. 20/= for unit, what was the wage rate? (iii) Suppose that the rental price of capital is expected to increased to Rs. 25/= while the wage rate and labour inputs will remain unchanged under the terms of labour contract. If the firm maintain efficient production what input rate of land will be used? www www

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 9TY

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