Catalina Films produces video shorts using digital editing equipment (K) and editors (L). The firm has the production function Q(K, L)=KxL, where Q is the hours of edited footage. The wage is $25, and the rental rate of capital is $50. The firm wants to produce 3,000 units of output at the lowest possible cost. a) Find the marginal product of each input. b) Determine whether the production function exhibits diminishing marginal product to each input. c) Find the marginal rate of technical substitution(MRTSLK)
Catalina Films produces video shorts using digital editing equipment (K) and editors (L). The firm has the production function Q(K, L)=KxL, where Q is the hours of edited footage. The wage is $25, and the rental rate of capital is $50. The firm wants to produce 3,000 units of output at the lowest possible cost. a) Find the marginal product of each input. b) Determine whether the production function exhibits diminishing marginal product to each input. c) Find the marginal rate of technical substitution(MRTSLK)
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.4P
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Catalina Films produces video shorts using digital editing equipment (K) and editors (L).
The firm has the production function Q(K, L)=KxL, where Q is the hours of edited footage.
The wage is $25, and the rental rate of capital is $50. The firm wants to produce 3,000 units
of output at the lowest possible cost.
a) Find the marginal product of each input.
b) Determine whether the production function exhibits diminishing marginal product to
each input.
c) Find the
d) How does MRTSLK change as more L, is used holding output constant.
e) Find the least costly combination of labor and capital to produce 3000 units
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