. Consider the following information of a hypothetical fırm: Q = 100K0.6 L0.8; w = 1; r = 3 %3D A. Solve for the cost-minimizing quantity of capital (K*) and labor (L*), and the minimum cost (C* ) if the firm targets to produce 3,000 units of output. B. If target output increases to 6,000 units, solve for the new cost-minimizing quantity of capital and labor, and the minimum cost. I C. Graphically illustrate the expansion path for the firm if it decides to increase its target output from 3,000 units to 6,000 units.

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 3.8P
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2. Consider the following information of a hypothetical firm:
Q = 100K0.6 L0.8; w =
= 1; r = 3
A. Solve for the cost-minimizing quantity of capital (K*) and labor (L*), and the
minimum cost (C*) if the firm targets to produce 3,000 units of output.
B. If target output increases to 6,000 units, solve for the new cost-minimizing
quantity of capital and labor, and the minimum cost. I
C. Graphically illustrate the expansion path for the firm if it decides to increase
its target output from 3,000 units to 6,000 units.
Transcribed Image Text:2. Consider the following information of a hypothetical firm: Q = 100K0.6 L0.8; w = = 1; r = 3 A. Solve for the cost-minimizing quantity of capital (K*) and labor (L*), and the minimum cost (C*) if the firm targets to produce 3,000 units of output. B. If target output increases to 6,000 units, solve for the new cost-minimizing quantity of capital and labor, and the minimum cost. I C. Graphically illustrate the expansion path for the firm if it decides to increase its target output from 3,000 units to 6,000 units.
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