Question

1. A firm uses labor (L) and machine (K) to assemble garden benches. The firm has the pro- duction function Q = F(L,K) = 207LVK, where L is the number of full-time workers the firm hires per day and K is the number of machines the firm uses per day. Both L and K can be non-integers (for example, a worker can work for half a day). Each worker costs $100 a day and each machine costs $200 a day. (a) (5 points) If 4 workers are hired and 4 machines are rented, how many garden benches can the firm assemble? (b) (5 points) If 4 workers are hired and 4 machines are rented, what is the marginal product of labor? (c) (5 points) If 9 machines are rented in the short run, assuming efficient production methods, what is its short-run production function? (d) (5 points) What is the total cost of hiring 9 workers and renting 4 machines?

Answer 1