The Cobb-Douglas production function for a particular product is N(x.y) = 60x"y4, where x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $40 and each unit of capital costs $120. Answer the questions (A) and (B) below. (A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product. (A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. Production will be maximized when usingDunits of labor andunits of capital. The maximum production is approximatelyunits. (Round to the nearest integer as needed.) (8) Find the marginal productivity of money i this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product. The marginal productivity of money is approximately (Round to four decimal places as needed.) The increase in production is approximatelyunits. (Round to the nearest unit as needed.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
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Chapter8: Cost Analysis
Section: Chapter Questions
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The Cobb-Douglas production function for a particular product is N(x.y) = 60xy04, where x is the number of units of labor and y is the number of units of capital
required to produce N(x, y) units of the product. Each unit of labor costs $40 and each unit of capital costs $120. Answer the questions (A) and (B) below.
(A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production.
(B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product.
(A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production.
Production will be maximized when using units of labor and units of capital.
The maximum production is approximately
(Round to the nearest integer as needed.)
units.
(B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product.
The marginal productivity of money is approximately
(Round to four decimal places as needed.)
The increase in productlion is approximatelyunits.
(Round to the nearest unit as needed.)
Transcribed Image Text:The Cobb-Douglas production function for a particular product is N(x.y) = 60xy04, where x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $40 and each unit of capital costs $120. Answer the questions (A) and (B) below. (A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product. (A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. Production will be maximized when using units of labor and units of capital. The maximum production is approximately (Round to the nearest integer as needed.) units. (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product. The marginal productivity of money is approximately (Round to four decimal places as needed.) The increase in productlion is approximatelyunits. (Round to the nearest unit as needed.)
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