The Cobb-Douglas production function for a particular product is N(x,y) = 80x0.60 4 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 $100. If $500,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production. Production will be maximized when using units of labor and units of capital.
The Cobb-Douglas production function for a particular product is N(x,y) = 80x0.60 4 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 $100. If $500,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production. Production will be maximized when using units of labor and units of capital.
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 10E
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