Optimize the Cobb-Douglas production function given the following parameters. The maximum about of money available to spend is $1, 600 where the price of K = 12 and the price of L = 6. That is Pk = 12 and Pl = 6. The function is given as q = K0.4L0.6. Using the Lagrangian method, what are the optimal values of K0 and L0?

Optimize the Cobb-Douglas production function given the following parameters. The maximum about of money available to spend is $1, 600 where the price of K = 12 and the price of L = 6. That is Pk = 12 and Pl = 6. The function is given as q = K0.4L0.6. Using the Lagrangian method, what are the optimal values of K0 and L0?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 1.1CE

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