A firm owns two production plants that make smart phones. The plants produce identical products and each
Fantastic news! We've Found the answer you've been seeking!
Question:
A firm owns two production plants that make smart phones. The plants produce identical products and each plant (i) has a production function given byQi=(KiLi)0.5fori=1, 2. The plants differ, however, in the amount of capital equipment in place in the short run. In particular, plant 1 hasK1=16, whereas plant 2 hasK2=64. Input prices forKandLarew=r=1. Suppose the production manager is told to minimize the short-run total cost of producing100units of output. The manager can choose how much to produce at plant 1, (Q1), and at plant 2, (Q2). How many of its output should be produced at each plant?
- A.Q1= 30 ,Q2= 70
- B.Q1= 50 ,Q2= 50
- C.Q1= 20 ,Q2= 80
- D.Q1= 40 ,Q2= 60
Posted Date: