ZuoTi.Pro
Question

material from chapters 7, 9 and 11) will be covered in the multiple choice section. 2 Example free response questions 2.1 Pro
han delete long run e2.p. produce 16000 units of output. What is the cost minimizing combination of capital and labor for thi
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Cost is minimized when MRTS = w/r
MRTS = MPL/MPK = K2/2LK = K/2L
So, MRTS = w/r gives,
K/2L = 1/4
So, L = 4K/2 = 2K
Thus, L = 2K

Q = 16,000 = LK2 = (2K)*K2 = 2K3
So, K3 = 16,000/2 = 8,000
So, K = 20

L = 2K = 2*20 = 40
Thus, L = 40

Cost minimizing combination: L = 40; K = 20

Minimized cost = wL + rK = (1*40) + (4*20) = 40 + 80 = 120

0 0
Add a comment
Know the answer?
Add Answer to:
material from chapters 7, 9 and 11) will be covered in the multiple choice section. 2 Example free response questi...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Suppose the firm's production function is given by q= F(K, L)= K2L with MPL=K2, MPK=2KL The...

    Suppose the firm's production function is given by q= F(K, L)= K2L with MPL=K2, MPK=2KL The price per unit of capital is 10 and the price per unit of labor is 5. Find the cost minimizing quantity of labor to produce 500,000 units of output. Please round to the closest integer.

  • Part 2: Short answer questions Question 1 (4 points): A sausage firm has a production function...

    Part 2: Short answer questions Question 1 (4 points): A sausage firm has a production function of the form: q = 5LK+K+L where q is units per day, L is units of labor input and K is units of capital output. The marginal product of the two inputs are: MPL = 5K+1, MPK = 5L +1. Price per unit of labor: w= $15, price per unit of capital: v= $15. Both labor and capital are variable. a. Write down the...

  • Lulu currently hires 4 workers and rents 9 machines to produce 12 leggings. Is Lulu minimizing...

    Lulu currently hires 4 workers and rents 9 machines to produce 12 leggings. Is Lulu minimizing her costs? How do you know? Lulu owns a firm that produces leggings. The production function is given by Q = 2VKVL, so that MPL VK VI and MPk = VL Q is Lulu's VK output, K is capital, L is labor, and MP is the marginal product. The wage (w)rate per worker (L) is $40 per day and rental rate (r) per unit...

  • You are an efficiency expert hired by a manufacturing firm that uses K and L as...

    You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w (price of labor) = $40, r (price of capital) = $100, MPL = 20, and MPK = 40 is the firm minimizing cost? Please explain and show any calculations. (b) The production function for a competitive firm is Q = K0.5L0.5. The firm sells its output at a price of $10 and can...

  • 1. Suppose a firm is producing output according to Q=1001KL. A. Draw a sketch of this...

    1. Suppose a firm is producing output according to Q=1001KL. A. Draw a sketch of this firm's isoquant map B. What equation do you use to find a cost-minimizing combination of inputs for a certain output level Q.? K C. The marginal products of labor and capital are given by MP, = 50, and L MPK = 50, L respectively. The price of labor is $5 per unit, and the price of K capital is $20 per unit. What is...

  • Consider a production function of three inputs, labor, capital, and materials, given by Q= LKM

     Consider a production function of three inputs, labor, capital, and materials, given by Q= LKM. The marginal products associated with this production function are as follows: MPL = KM, MPk = LM, and MPM = LK. Let w = 5, r = 1, and m = 2, where m is the price per unit of materials. (a) Suppose that the firm is required to produce Q units of output. Show how the cost-minimizing quantity of labor depends on the quantity Q....

  • The production function of the Auto parts firm is given by Q-5L-L, where Q is the...

    The production function of the Auto parts firm is given by Q-5L-L, where Q is the units of output and L is the number of labor hours. Each output sells for 100 dollars per unit. The human resources manager estimates that the marginal cost of hiring an extra worker is 50 dollars. How many labor hours should this firm hire? Hint: MPL=5-2 L 1) 2) A frim's production function is given by Q(L)-6L, where Q measures output and L is...

  • Derive the cost function associated with the production function in questions 2 is C(q) = 4...

    Derive the cost function associated with the production function in questions 2 is C(q) = 4 + 2q and in questions 3 is C=wL+rK=1*8+2*4=16. The cost function is of the general form C(Q) = xQ. What is the value of x? 2. The inverse market demand function is given by P()-20 q. Would consumers prefer to face a monopolist in this market with a cost function given by C(g)4+ 2q, or a perfectly competitive firm with a cost function given...

  • A. L=25; K=16 B. L=40; K=10 C. L=16; K=25 D. L=10; K=40 E. L=20; K=20 =...

    A. L=25; K=16 B. L=40; K=10 C. L=16; K=25 D. L=10; K=40 E. L=20; K=20 = VE Lulu owns a firm that produces leggings. The production function is given by Q=2VKVL, so that MPL K and MPK = Q is Lulu's VL VK output, K is capital, L is labor, and MP is the marginal product. The wage (w)rate per worker (L) is $40 per day and rental rate (r) per unit of capital (K) is $10 per day. How...

  • Imagine that your firm has a production function given by Q = 2 KL, where K...

    Imagine that your firm has a production function given by Q = 2 KL, where K is capital and L is labor. If capital rents for $100 per unit per day, labor can be hired for $200 per unit per day, and the firm is minimizing costs, a. What is the total cost of producing q units of output? b. What is the average cost of producing q units of output? c. What is the marginal of producing q units...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT