Consider the production function Q = (0.5K1/3 + 0.5L1/3)3 with a corresponding MRTS = K2/3/L2/3.  a. Prove that this production function exhibits constant returns to scale. b. Suppose the firms want to minimize the cost of producing 8 units of output. It pays a wage rate W of $40 and capital cost R of $10. How many units of labor and capital should the firm use?

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
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Chapter9: Production Functions
Section: Chapter Questions
Problem 9.7P
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Consider the production function = (0.5K1/3 + 0.5L1/3)3 with a corresponding MRTS = K2/3/L2/3

a. Prove that this production function exhibits constant returns to scale.

b. Suppose the firms want to minimize the cost of producing 8 units of output. It pays a wage rate W of $40 and capital cost R of $10. How many units of labor and capital should the firm use?

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