A firm produces output
A firm produces output according to a production function:
Q = F(K,L) = min {5K,5L}.
a. How much output is produced when K = 2 and L = 3?
b. If the wage rate is $50 per hour and the rental rate on capital is $30 per hour, what is the cost-minimizing input mix for producing 10 units of output?
Capital:
Labor:
c. How does your answer to part b change if the wage rate decreases to $30 per hour but the rental rate on capital remains at $30 per hour?
Capital increases and labor decreases. |
Capital and labor increase. |
Capital decreases and labor increases. |
It does not change. |
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