(Long-run costs,) Carmela's pasta factory employs workers and pasta machines according to the lowing production function f(L,K) = 10.5K0.5 e hourly cost of capital is $10 and the hourly cost of workers is $40. Write out the Lagrangian for the cost-minimization problem. Using the first order conditions of the Lagrangian, derive the optimal capital to labor ratio. Describe long-run output expansion path. Suppose Carmela wishes to produce 1000 units of pasta. How much labor and capital should she ploy? How much will it cost to produce? An order arrives doubling the amount of pasta Carmela needs to produce. Assuming she is unable t rchase more capital, how much will it cost to meet the new production level? In the long run Carmola will be able to ampl mora capital as well as labor. If Cormola continues
(Long-run costs,) Carmela's pasta factory employs workers and pasta machines according to the lowing production function f(L,K) = 10.5K0.5 e hourly cost of capital is $10 and the hourly cost of workers is $40. Write out the Lagrangian for the cost-minimization problem. Using the first order conditions of the Lagrangian, derive the optimal capital to labor ratio. Describe long-run output expansion path. Suppose Carmela wishes to produce 1000 units of pasta. How much labor and capital should she ploy? How much will it cost to produce? An order arrives doubling the amount of pasta Carmela needs to produce. Assuming she is unable t rchase more capital, how much will it cost to meet the new production level? In the long run Carmola will be able to ampl mora capital as well as labor. If Cormola continues
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: The Cost Of Production
Section: Chapter Questions
Problem 2CQQ
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