The Acme Anvil Company's output is given by the Cobb-Douglas Productionfunction P =60L2/3 K1/3, where P is the number of anvils produced whenLis the amount spent on labor and K is the amount spent on capital.a. What is the production if L = 150 and K = 150?b. Find the marginal productivities.C. Evaluate the marginal productivities with L = 150 and K = 150.d. Interpret the meanings of the marginal productivities found in part c.e. If their budget is $300 then there is a constraint L+ K = 300. UseLagrange multipliers (2) to find the values of L and K that willmaximize production and find the maximum productionf. Find 2. 12| is called the marginal productivity of money and will givethe number additional units produced for each dollar increase in thebudget. Interpret 2 for this problem.MacBook Prourses/34419/files/5014304?wrap=1

In economics, the Cobb–Douglas production function is a particular functional form of the production…

The Acme Anvil Company's output is given by the Cobb-Douglas Production function P = 60L2/3K1/3, where P is the number of anvils produced when %3D Lis the amount spent on labor and K is the amount spent on capital.

The Acme Anvil Company's output is given by the Cobb-Douglas Production function P = 60L2/3K1/3, where P is the number of anvils produced when %3D Lis the amount spent on labor and K is the amount spent on capital.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.1P

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

The Acme Anvil Company's output is given by the Cobb-Douglas Production
function P =
60L2/3 K1/3, where P is the number of anvils produced when
Lis the amount spent on labor and K is the amount spent on capital.
a. What is the production if L = 150 and K = 150?
b. Find the marginal productivities.
C. Evaluate the marginal productivities with L = 150 and K = 150.
d. Interpret the meanings of the marginal productivities found in part c.
e. If their budget is $300 then there is a constraint L+ K = 300. Use
Lagrange multipliers (2) to find the values of L and K that will
maximize production and find the maximum production
f. Find 2. 12| is called the marginal productivity of money and will give
the number additional units produced for each dollar increase in the
budget. Interpret 2 for this problem.
MacBook Pro
urses/34419/files/5014304?wrap=1

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