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Your company is trying to determine the amount of inputs of labor and capital that would minimize the cost of producing 1,000 units. They have
Your company is trying to determine the amount of inputs of labor and capital that would minimize the cost of producing 1,000 units.
They have provided you with the following Cobb-Douglas production function:
Q=25*L0.2*K.3
The wage (cost of labor) is $10 per labor unit and the rent (cost of capital) is $20 per capital unit. You have been given the following combinations of Labor and Capital (restrict your analysis to these).
Q | L | K |
1000 | 1700 | 1537 |
1000 | 1800 | 1480 |
1000 | 1900 | 1429 |
1000 | 2000 | 1380 |
1000 | 2100 | 1335 |
Use this information to answer the next two questions:
Question 18 5 pts Which labor and capital combination produces 1,000 units the cheapest? O 2100 labor units and 1335 capital units 0 1900 labor units and 1429 capital units 0 2000 labor units and 1380 capital units 0 1700 labor units and 1537 capital units 0 1800 labor units and 1480 capital units Question 19 5 pts Calculate 11:3: (marginal product of capital divided by rent] at four (4] decimal places for the labor and capital combination that produces 1,000 units the cheapestStep by Step Solution
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