Question
A firm produces according to the following production function: Q = K .25 L .75 . The price of K is $4 per unit, and
A firm produces according to the following production function: Q = K.25L.75. The price of K is $4 per unit, and the price of L is $6 per unit.
a. What is the optimal capital/labor ratio?
b. Derive the amount of capital and labour required to produce 400 units of output. At the given prices what is the total cost of producing 400 units of output?
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Price theory and applications
Authors: Steven E landsburg
8th edition
538746459, 1133008321, 780538746458, 9781133008323, 978-0538746458
