Question

You are the assistant vice president in charge of production for a firm that produces computers Your firm's production function is f (L, K) min (L, K) Where L and K are the quantities of the two inputs that your firm uses in its production process In the axes below, illustrate your firm's isoquant to produce 170 computers. Be sure to label the axes as a part of your answer. If the cost of input L is $18 per unit, and the cost of input K is S10 per unit, illustrate some of your firm's isosoat curves in the axes above. Your firm has tasked you to determine the least it will cost to produce 170 computers. the cost figure that you will provide to your superiors. Calculate

Answer 1

Now D^n func f = Min(L, K), Q = 170, then 170 = Min (L, K) as at Eqm L^bar = K = Q^bar so right angled isoquants b) Now is cost line, c^bar = wL + rk C^bar = 18 L + 10 K Ans c) Now at Eqn L^* = K^* = Q^bar = 170 then cost funcn C = wL^* + rk^* C = 18 times 170 + 10 times 170 c = 170 times 28 = 4760 so use L & K = 170 units