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A firm has two plants - one in Adelaide (A) and one in Brisbane (B). Let QA and QB denote the amounts of output produced
A firm has two plants - one in Adelaide (A) and one in Brisbane (B). Let QA and QB denote the amounts of output produced in plants A and B respectively. Production functions in these two plants respectively are QA = V 0.5LA, QB = 0.1L B where L A and L B are the amounts of labour used in plants A and B respectively. Let WA and WB denote the price of labour in Adelaide and Brisbane respectively. Suppose WA = 1 and WB = x, where x = 4. (a) (1 point) Suppose production target is Q = 20. To minimise costs, the firm would choose QA = and QB = (b) (0.5 points) Suppose the firm's production target is revised downward to Q = 5. To minimise costs, the firm would choose QA = and QB =
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