Computing the optimal level of inputs

Reference no: EM1311561

A firm uses two inputs, unskilled labor (L) and capital (K) to produce its product. The wage rate for one unit of labor is $5, while units of capital cost $20. The firm's production function per day is Q (L, K) =4LK, while the MPL=4K and the MPK=4L. The firm wants to keep a constant production of Q0=400 units of output per day.

Find the optimal level of inputs L* and K* that minimize the cost of producing Q0. What is the cost of production associated to L* and K*?

In a graph depict the iso - quant for Q0 and the isocost associated to the solution in part a). Remember to put the intercepts and depict the optimal input levels L* and K*.

Reference no: EM1311561

Questions Cloud

What is the magnitude of the counter clockwise force : A laboratory ultracentrifuge is designed to produce a centripetal acceleration of 5.0 x 10^6 g at a distance of 4.00cm from the axis. What angular velocity in rev/min is necessary.

Computation of value of stock and stock prices : Computation of value of stock and find What are the stock prices for each company

Calculate the ampere-hour rating of the battery : Use approximate calculations assuming constant current during the output pulse. Calculate the ampere-hour rating of the battery so it lasts for five years.

Grade point distribution : What is Peter's median grade point at graduation? What is the shape of the grade point distribution?

Computing the optimal level of inputs : Find the optimal level of inputs L* and K* that minimize the cost of producing Q0. What is the cost of production associated to L* and K*?

How fast does it move after the bullet emerges : Therefore of his observations, Ole Roemer concluded that eclipses of Io by Jupiter were delayed by 22 min throughout a six-month period as the Earth moved from the point in its orbit where it is closest to Jupiter to the diametrically opposite point ..

Thessis on leadership philosophy- subjective : Thessis on Leadership philosophy- Subjective. The main purpose of this papaer for you to describe in your own words your leadership philosophy.

Determine the simple rate of return : Determine the simple rate of return on the new automated bottling machine.

Determining mean time for game using significance level : Can we conclude that mean time for game is less than 3.50 hours? Use.05 significance level.

User Account

All Pages