A factory that you are managing has an hourly production process that can be represented by the following Cobb-Douglas production function: Q = (K^0.25)(L^0.25.) The price of one unit of capital per hour is $10 and the price of one unit of labour per hour is $20. a) Find the optimal amount of labour and capital that you will be using to produce 100 units of output, b) Compute the total cost of producing 100 units of output. c) What have you learn from doing or thinking about this problem?

A factory that you are managing has an hourly production process that can be represented by the following Cobb-Douglas production function: Q = (K^0.25)(L^0.25.) The price of one unit of capital per hour is $10 and the price of one unit of labour per hour is $20. a) Find the optimal amount of labour and capital that you will be using to produce 100 units of output, b) Compute the total cost of producing 100 units of output. c) What have you learn from doing or thinking about this problem?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 18PAE

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Question

A factory that you are managing has an hourly production process that can be represented by the
following Cobb-Douglas production function: Q = (K^0.25)(L^0.25.)
The price of one unit of capital per hour is $10 and the price of one unit of labour per hour is $20.
a) Find the optimal amount of labour and capital that you will be using to produce 100 units of output,
b) Compute the total cost of producing 100 units of output.
c) What have you learn from doing or thinking about this problem?

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