Polyoak Containers produces milk cartons that are sold to dairy distributors.  Polyoak has estimated this production function for its milk carton division:             Q = 20L0.6K0.4,                     where Q = output measured in one thousand carton lots, L = labour measured in person hours, and K = capital measured in machine hours.  Polyoak currently pays a wage of R10 per hour and considers the relevant rental price for capital to be R25 per hour. Determine the optimal capital-labour ratio that Polyoak should use in the milk carton division.

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 6E
icon
Related questions
Question
100%

Polyoak Containers produces milk cartons that are sold to dairy distributors.  Polyoak has estimated this production function for its milk carton division:

            Q = 20L0.6K0.4,                    

where Q = output measured in one thousand carton lots, L = labour measured in person hours, and K = capital measured in machine hours.  Polyoak currently pays a wage of R10 per hour and considers the relevant rental price for capital to be R25 per hour. Determine the optimal capital-labour ratio that Polyoak should use in the milk carton division.

Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Micro Economics For Today
Micro Economics For Today
Economics
ISBN:
9781337613064
Author:
Tucker, Irvin B.
Publisher:
Cengage,
Economics For Today
Economics For Today
Economics
ISBN:
9781337613040
Author:
Tucker
Publisher:
Cengage Learning
Survey Of Economics
Survey Of Economics
Economics
ISBN:
9781337111522
Author:
Tucker, Irvin B.
Publisher:
Cengage,