A firm produces output according to a production function: Q= RK,L) = min {6K,2L). a. How much output is produced when K=2 and L= 3? |unit(s) b. If the wage rate is $30 per hour and the rental rate on capital is $10 per hour, what is the cost-minimizing input mix for producing 6 units of output? Capital: Labor: c. How does your answer to part b change if the wage rate decreases to $10 per hour but the rental rate on capital remains at $10 per hour? Capital decreases and labor increases. O It does not change. O Capital increases and labor decreases. O Capital and labor increase.
A firm produces output according to a production function: Q= RK,L) = min {6K,2L). a. How much output is produced when K=2 and L= 3? |unit(s) b. If the wage rate is $30 per hour and the rental rate on capital is $10 per hour, what is the cost-minimizing input mix for producing 6 units of output? Capital: Labor: c. How does your answer to part b change if the wage rate decreases to $10 per hour but the rental rate on capital remains at $10 per hour? Capital decreases and labor increases. O It does not change. O Capital increases and labor decreases. O Capital and labor increase.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section7.A: Appendix: A Closer Look At Production And Cost
Problem 1AQ
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Question
A firm produces output according to a production function:
Q = F(K,L) = min {6K,2L}.
a. How much output is produced when K = 2 and L = 3?
unit(s)
b. If the wage rate is $30 per hour and the rental rate on capital is $10 per hour, what is the cost-minimizing input mix for producing 6 units of output?
Capital:
Labor:
c. How does your answer to part b change if the wage rate decreases to $10 per hour but the rental rate on capital remains at $10 per hour? (Choose one that is the best answer)
-
Capital decreases and labor increases.
-
It does not change.
-
Capital increases and labor decreases.
-
Capital and labor increase.
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