Suppose the process of producing lightweight parkas by Polly's Parkas is described by the function q=40K04(L-40)0.6 where q is the number of parkas produced, K the number of computerized stitching-machine hours, and L the number of person-hours of labor. In addition to capital and labor, $40 worth of raw materials is used in the production of each parka. Note that and да ак =40(0.4)K 0.60 (L-40)0.6 да =40K04 (0.6)(L-40) 0.4 -0.40 aL By minimizing cost subject to the production function, derive the cost-minimizing demands for K and L as a functi of output (q), wage rates (w), and rental rates on machines (r). The cost-minimizing demands for K and Lare

What is the difference between a fixed input and a variable input?

Suppose there are two inputs for production, labor and capital. The firm’s production process isdefined by the following production functiony=f(L,K).Howdoweinterpretthefirm’smarginalrateof technical substitution? a)How many units of capital the firm would have to give up in order to attain one more unit oflabor, such that the firm maintains the same cost level b)How many units of capital the firm would have to give up in order to attain one more unit oflabor, such that the firm produces one more unit of output c)How many units of capital the firm would have to give up in order to attain one more unit oflabor, such that the firm maintains the same level of production d)a) and b) are correct e)a) and c) are correct

Sam Malone is considering renovating the bar stools at Cheers.The production function for new bar stools is given byq = 0.1k 0.2l0.8 where q is the number of bar stools produced during the renovation week, k represents the number of hours of bar stoollathes used during the week, and l represents the number ofworker hours employed during the period. Sam would like toprovide 10 new bar stools, and he has allocated a budget of$10,000 for the project.a. Sam reasons that because bar stool lathes and skilled barstool workers both cost the same amount ($50 per hour),he might as well hire these two inputs in equal amounts.If Sam proceeds in this way, how much of each input willhe hire and how much will the renovation project cost?b. Norm (who knows something about bar stools) arguesthat once again Sam has forgotten his microeconomics.He asserts that Sam should choose quantities of inputs sothat their marginal (not average) productivities are equal.If Sam opts for this plan instead, how much of…