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Labour economics Suppose that the hourly wage is $10 and the price of each unit of capital (K) is $400, 000 (rent on expensive machinery).

Labour economics

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Suppose that the hourly wage is $10 and the price of each unit of capital (K) is $400, 000 (rent on expensive machinery). The price of output is constant at $25 per unit. The production function is given by: Q = F(L,K) = 200 L1/2k1/2 Suppose initially that the firm is operating in the short-run such that its capital stock is fixed at 4 units. b) Suppose the firm produces the same level of output in the long run as it did in the short run (i.e. the output level in part c above). How much labour and capital should the firm use? Type your answer here units of Capital Type your answer here units of Labour Optimal level of output = 200000

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