Question
The production function for footballs is q = 5L0.2K0.8. Input costs are w=25 and r=200. a) If the optimal amount of output is 20 footballs,
The production function for footballs is q = 5L0.2K0.8. Input costs are w=25 and r=200.
a) If the optimal amount of output is 20 footballs, solve for the cost-minimizing K and L. Compute total costs, and show the situation on a graph.
b) If the wage rate rises, and the firm wishes to continue producing 20 footballs, show the changes that take place in K and L on your graph, along with the new tangency point.
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The Great Divide Unequal Societies And What We Can Do About Them
Authors: Joseph E Stiglitz
1st Edition
0393352188, 9780393352184
