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Suppose a rm has a production function given by Q = L1/2K1/2. Therefore, l 2 andMPK 2 L1 2K2 1 2 MPL = K 2L
Suppose a rm has a production function given by Q = L1/2K1/2. Therefore, l 2 andMPK 2 L1 2K2 1 2 MPL = K 2L 1 MI The rm can purchase labor, L, at a price w = 36 and capital, K, at a price of r = 4. If the rm wants to produce 45 units of output (Q=45), how much labor and capital should the rm hire in order to minimize the cost of production? The rm should hire units of labor. The rm should hire units of capital. a) Using the same production function and prices of labor and capital given in the previous problem, write the expression for the firm's total cost as a function of Q, and show how you arrived at your answer. b) Again, assuming the same production function and prices of labor and capital from the previous problem, what is the firm's marginal cost
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