Suppose a firm with a production function given by Q = 30 K^{0.5}L^{0.5} produces 1,500 units of...
Question:
Suppose a firm with a production function given by Q = 30{eq}K^{0.5}L^{0.5} {/eq} produces 1,500 units of output. The firm pays a wage of $40 per unit and pays a rental rate of capital of $640 per unit. How many units of labor and capital should the firm employ to minimize the cost of producing 1,500 units of output?
Production Function:
This shows the relationship between the input factors such as land and labor, among others, and the output level. It shows the units of input that are required to produce a particular level of output.
Answer and Explanation: 1
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View this answerTo produce 1,500 units of output, 20 units of labor and 1.25 units of capital are required. The firm will have the equilibrium at the point where the...
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Production Function in Economics: Definition, Formula & Example
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Chapter 11 / Lesson 27
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Learn about the production function. Read the production function definition in economics, learn the production function formula. Plus, see graphs and examples.
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