Please answer fast and Arjent please Consider a firm that uses a production function of the form Q = L*K where L denotesthe amount of labour input and K the amount of capital input. The cost of labour is$20 per unit while the cost of capital is $100 per unit. The firm is interested inproducing its output in a way that minimizes the cost of production. Which of thefollowing statements is CORRECT?Given the prices of labour and capital inputs, the cost minimizing combination of inputssuggests that the firm should use labour and capital such that 5L = K.Given the prices of labour and capital inputs, the cost minimizing combination of inputssuggests that the firm should use labour and capital such that L = 5K.Given the prices of labour and capital inputs, the cost minimizing combination of inputssuggests that the firm should use labour and capital such that L = K.OGiven the prices of labour and capital inputs, the cost minimizing combination of inputssuggests that the firm should use labour and capital such that L = 2K.Which is the correct answer option?

Production function is a mathematical expression that shows different combinations of inputs that…

Answered: Given the prices of labour and capital…

Given the prices of labour and capital inputs, the cost minimizing combination of inputs suggests that the firm should use labour and capital such that L = 5K.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.9P

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Concept explainers

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.

Question

Please answer fast and Arjent please

Consider a firm that uses a production function of the form Q = L*K where L denotes
the amount of labour input and K the amount of capital input. The cost of labour is
$20 per unit while the cost of capital is $100 per unit. The firm is interested in
producing its output in a way that minimizes the cost of production. Which of the
following statements is CORRECT?
Given the prices of labour and capital inputs, the cost minimizing combination of inputs
suggests that the firm should use labour and capital such that 5L = K.
Given the prices of labour and capital inputs, the cost minimizing combination of inputs
suggests that the firm should use labour and capital such that L = 5K.
Given the prices of labour and capital inputs, the cost minimizing combination of inputs
suggests that the firm should use labour and capital such that L = K.
O
Given the prices of labour and capital inputs, the cost minimizing combination of inputs
suggests that the firm should use labour and capital such that L = 2K.
Which is the correct answer option?

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