Assume that production function of company is given with the following Cobb-Douglas production function, Y=0.4*K0.8L0.2 where K is capital and L is labor. Assume that cost of one-unit capital and labor is 2$ and 1.5$, respectively. Price of output is 5$. Find marginal product of both capital and labor.Find whether capital and labor is diminishing return or not. Find profit maximizing amount of labor in short run if capital is fixed at quantity of 20. Find profit maximizing amount of capital and labor in the long run.
Assume that production function of company is given with the following Cobb-Douglas production function, Y=0.4*K0.8L0.2 where K is capital and L is labor. Assume that cost of one-unit capital and labor is 2$ and 1.5$, respectively. Price of output is 5$. Find marginal product of both capital and labor.Find whether capital and labor is diminishing return or not. Find profit maximizing amount of labor in short run if capital is fixed at quantity of 20. Find profit maximizing amount of capital and labor in the long run.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 19PAE
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Assume that production function of company is given with the following Cobb-Douglas production function, Y=0.4*K0.8L0.2 where K is capital and L is labor. Assume that cost of one-unit capital and labor is 2$ and 1.5$, respectively. Price of output is 5$. Find marginal product of both capital and labor.Find whether capital and labor is diminishing return or not. Find profit maximizing amount of labor in short run if capital is fixed at quantity of 20. Find profit maximizing amount of capital and labor in the long run.
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