hours of l

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 40P
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A farmer uses K units of machinery and L hours of labor to produce C tons of corn, with the production function, C= 2L0.5 K. The farmer currently uses L = 20 and K = 10. Suppose the input price ratio is w/r = 1. What would you tell the farmer to do in order to minimize his cost of production given the current level of output?

a. You should use more machinery and more labor. 

b. You should use more machinery and less labor. 

c. You should use less machinery and more labor. 

d. You should use less machinery and less labor. 

 

Suppose that a latte can only be produced by using exactly 1 ounce of espresso (E) and 3 ounces of milk (M). What is the firm's cost function if the price of espresso is 0.50 per ounce and the price of milk is 0.10 per ounce?

a. C = 4q

b. C = 0.8q

c. C = 0.4q

d. C = 160q

e. C = 80q

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