(c) If the price of capital is $750 a week and the price of labor is $300 aweek, which input does the firm employ? How much does it employ?(d) If the price of labor drops to $225 a week due to outsourcing, whichinput does the firm employ? How much does it employ? 2. Suppose there are two inputs in the production function, labor and cap-ital, and these two inputs are perfect substitutes. The production func-tion for how much output is produced in a week can be described byq(L,K)=L+3Kand the firm wants to produce q 100 units this week. The currentprice of the firm's output is P = $5001

In economics, a production function gives the technological relation between quantities of physical…

(c) If the price of capital is $750 a week and the price of labor is $300 a week, which input does the firm employ? How much does it employ? (d) If the price of labor drops to $225 a week due to outsourcing, which input does the firm employ? How much does it employ?

(c) If the price of capital is $750 a week and the price of labor is $300 a week, which input does the firm employ? How much does it employ? (d) If the price of labor drops to $225 a week due to outsourcing, which input does the firm employ? How much does it employ?

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 2QCMC

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Question

(c) If the price of capital is $750 a week and the price of labor is $300 a
week, which input does the firm employ? How much does it employ?
(d) If the price of labor drops to $225 a week due to outsourcing, which
input does the firm employ? How much does it employ?

2. Suppose there are two inputs in the production function, labor and cap-
ital, and these two inputs are perfect substitutes. The production func-
tion for how much output is produced in a week can be described by
q(L,K)=L+3K
and the firm wants to produce q 100 units this week. The current
price of the firm's output is P = $500
1

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