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Could you help me figure this out? EXERCISE 5 A rm uses labor and machines to produce output according to the production function f(L; M)

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EXERCISE 5 A rm uses labor and machines to produce output according to the production function f(L; M) = ttest, where L is the number of units of labor used and M is the number of machines. The cost of labor is $30 per unit and the cost of using a machine is $211]. (1} On a graph, draw an isocnst line for this rm, showing combinations of machines and labor that cost $ and another isocost line showing combinations that cost $300. What is the slope of these isocost lines'iI (2} Suppose that the rm wants to produce its output in the cheapest possible way. Find the number of machines it would use per worker. (Hint: The rm will produce at a point where the slope of the production isoquant equals the slope of the isoeost line} (3} On the graph, sluetch the production isoquant corresponding to an output of ll]. Calculate the amount of labor and the number of machines that are used to produce El] units of output in the cheapest possible wag-r, given the above factor prices. Calculate the cost of producing El] units at these factor prices. (a) How many units of labor and how many machines would the rm use to produce 3: units in the cheapest possible way? How much would this cost? (Hint: Notice that there are constant returns to scale.)

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