Question

Question 1 Sachith CADs production function for a given level of technology is given by q 0.25K0.25L0.75. Where q is the amount of prints per hour. Suppose the rental rate per printing machine is $52 per hour, and labor can be hired at $12 per worker hour. The company has allocated $150,000 for the initial run of prints. a. Calculate marginal products of labor and capital. b. Determine the firm's optimal capital-labor ratio (labor on the x axis) c. Construct the isocost equation. d. Determine the appropriate input mix to get the greatest output for a total cost of $150,000 e. Compute the level of output f. Explain what would happen in the short run (keeping capital fixed) to the appropriate input mix if production was changed to 1,500 units per hour. Explain your answer using an isoquant-isocost graph (no need of any calculations).

Answer 1

mavginat pmdfb mavgina poducf of capitol24 L-o.ds Ơ.AS. (o . 35) Κ 2L- っk (늦) 1 6 marginal vate of technica a rol ubtuti Yent L,E) 31)K/ cney cur 1 2 o. 75 tc. 13 13

fsocot equation Frm part we hav C13k) = 。25 (13) ,56 k +52ヒ = Tc = 832 130 s equatins

We need maximu mCjt of in,o㈧ On 832 8 32 gニ『234.31.3 = 208k 123y, 313 2o3 ヒー 20 8 13× S. 9了419 Appropict input mixin whou number is ( L, k) ( 77, 6) maximum porsilu output when FIsok j 123. 331231 pints per hou