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Suppose the wage is w =10, the rental rate of capital is r =90, and the firm's CRS Cobb-Douglas production function is q = 2LOS
Suppose the wage is w =10, the rental rate of capital is r =90, and the firm's CRS Cobb-Douglas production function is q = 2LOS ROS a. Define Marginal Product of Labor (MP.) and Marginal Product of Capital (MP,) terms. (4 points) b. Derive the expressions for MP, and MP. (4 points) c. Define Marginal Rate of Technical Substitution (MRTS) concept. (4 points) d. Derive the expression for MRTS. (5 points)e. What is the cost-minimizing bundle of labor and capital for producing output of q = 600 units? (10 points) f. What is total cost at this bundle ? (5 points) g. Draw the isoquant and isoscost lines and show the optimal input usage on the graph. (5 points)
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