Here is the production function for our local brewery's best-selling Halloween pumpkin beer: q = 100L0.5K0.6 Current wages (w) are $12 and the cost of capital (r) is $4. 1. Calculate the brewery's marginal rate of technical substitution (MRTS). 2. If the brewery is currently using 50 units of labor (L) how much capital should they use?
Here is the production function for our local brewery's best-selling Halloween pumpkin beer: q = 100L0.5K0.6 Current wages (w) are $12 and the cost of capital (r) is $4. 1. Calculate the brewery's marginal rate of technical substitution (MRTS). 2. If the brewery is currently using 50 units of labor (L) how much capital should they use?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section7.A: Appendix: A Closer Look At Production And Cost
Problem 1AQ
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