Suppose that the labor cost of Conchita-crem is $20 USD per hour, and the cost of capital is $5 USD per hour. Suppose the production function for conchas is q = 10L2K"/2 %3D a) José Antonio produces 1000 conchas. He is currently using 100 workers and 100 ovens. Is he optimizing his use of inputs of production? b) What is the rule to optimize the use of inputs of production? c) Find the optimal level of labor and capital for Conchita-Crem. What is its total cost?
Suppose that the labor cost of Conchita-crem is $20 USD per hour, and the cost of capital is $5 USD per hour. Suppose the production function for conchas is q = 10L2K"/2 %3D a) José Antonio produces 1000 conchas. He is currently using 100 workers and 100 ovens. Is he optimizing his use of inputs of production? b) What is the rule to optimize the use of inputs of production? c) Find the optimal level of labor and capital for Conchita-Crem. What is its total cost?
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.9P
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