The Southern Mail produces local newspapers. The company can rent its equipment and hire workers at competitive rates. Equipment needed for this operation can be rented at R1 per hour, and labour can be hired at R2 per worker hour. The production function using available technology can be expressed as Q-2L05 +3K05. The marginal product of labour is given as 1 and the 20.3 3 marginal product of capital is expressed as 2405 a. Determine the firm's optimal ratio of labour to capital. b. Determine the level of capital and labour in the long run if the firm wants to apply a cost constraint of R396. Calculate the output of the firm.
The Southern Mail produces local newspapers. The company can rent its equipment and hire workers at competitive rates. Equipment needed for this operation can be rented at R1 per hour, and labour can be hired at R2 per worker hour. The production function using available technology can be expressed as Q-2L05 +3K05. The marginal product of labour is given as 1 and the 20.3 3 marginal product of capital is expressed as 2405 a. Determine the firm's optimal ratio of labour to capital. b. Determine the level of capital and labour in the long run if the firm wants to apply a cost constraint of R396. Calculate the output of the firm.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section7.A: Appendix: A Closer Look At Production And Cost
Problem 1AQ
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Transcribed Image Text:The Southern Mail produces local newspapers. The company can rent its equipment and hire workers at competitive rates. Equipment needed for this operation can be rented at R1 per hour, and
labour can be hired at R2 per worker hour. The production function using available technology can be expressed as Q = 2L05 +3K0.5. The marginal product of labour is given as 1
20.5
and the
marginal product of capital is expressed as
3
2K0.5
a. Determine the firm's optimal ratio of labour to capital.
b. Determine the level of capital and labour in the long run if the firm wants to apply a cost constraint of R396. Calculate the output of the firm.
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