8. An economy is endowed with = 100 units of capital and L= 200 units of labor. Two goods are produced: mugs and spoons. The production function for mugs is given by K= M(Km, Lm) = √ Km Lm. And the production function for teaspoon is T (KT, LT) = KT¹/3 L2/3 a. Find the relationship between capital labor ratio in mug production and capital labor ratio in teaspoon production that must prevail when the production is efficient.

8. An economy is endowed with = 100 units of capital and L= 200 units of labor. Two goods are produced: mugs and spoons. The production function for mugs is given by K= M(Km, Lm) = √ Km Lm. And the production function for teaspoon is T (KT, LT) = KT¹/3 L2/3 a. Find the relationship between capital labor ratio in mug production and capital labor ratio in teaspoon production that must prevail when the production is efficient.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.2P

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