Question
Aamir's company has the production function Q=8K^0.75L^0.25, where Q measures output, K measures machine hours, and L measures labor hours. Suppose that the rental rate
Aamir's company has the production function Q=8K^0.75L^0.25, where Q measures output, K measures machine hours, and L measures labor hours. Suppose that the rental rate of capital is R=$120, the wage rate is W=$20, and the firm wants to produce 800 units of output. Use the Lagrange method to find the optimal input mix. What the optimal level of K?
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