Question

6. Cost Minimization Homework . Due in a day Unanswered 1 attempt left Submit Perfect substitutes Homework – Unanswered Fill in the Blanks Suppose a firm with production function q =L+ faces input prices w2, rl, and wants to produce q=10 units of output. If this firm is cost-minimizing, it will hire units of labor, units of capital, and will incur a total cost of Unanswered 1 attempt left 7 Sub Fullscreen - lecture7 (2).pdf A lecture8.pdf lecture 9.pdf Show All

Answer 1

Answer
10
0
20
==========
the production function is the form of perfect substitutes
It will higher one input with higher marginal outputt per dollar
Marginal product of labor =dq/dL=1
the marginal product of capital =dq/dK=1/3
MPL per dollar =MPL/wage=1/2=0.5
MPK per dollar =(1/3)/1=1/3
the MPL per dollar is higher than the MPK per dollar so the firm hires only labor

K=0 and q=10
10=L+0/3
L=10
the firm will hire 10 units of labors
total cost =number of labor * wage =10*2=$20