2. Calculate the marginal products of labor and capital, then find the marginal cost.

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 3.9P
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2. Calculate the marginal products of labor and capital, then find the marginal cost.
Transcribed Image Text:2. Calculate the marginal products of labor and capital, then find the marginal cost.
1 Labor Demand
Suppose that Wakanda Bakery has the following Cobb-Douglas Production Function:
Y = K³E¹,
where K represents the units of capital employed, E is the number of employee hours employed, and
Y is total production. Wakanda Bakery is bound by the minimum wage of the land and pays USD
15 per hour and the cost of capital, r, is equal to 1920 per unit. The firm faces 1 unit of capita that
cannot be changed.
Transcribed Image Text:1 Labor Demand Suppose that Wakanda Bakery has the following Cobb-Douglas Production Function: Y = K³E¹, where K represents the units of capital employed, E is the number of employee hours employed, and Y is total production. Wakanda Bakery is bound by the minimum wage of the land and pays USD 15 per hour and the cost of capital, r, is equal to 1920 per unit. The firm faces 1 unit of capita that cannot be changed.
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