When x thousand dollars are spent on labor and y thousand dollars on equipment, the output of a certain factory is Q units, where Q(x, y) = 240x³/85/8 Suppose $200,000 is available for both labor and equipment. (a) How should the money be allocated between labor and equipment to generate the largest possible output? What is the largest pos- sible output? (b) Use the marginal productivity of money to estimate the change in the maximum output of the factory that will result if money available for labor and equipment is increased to $210,000.

When x thousand dollars are spent on labor and y thousand dollars on equipment, the output of a certain factory is Q units, where Q(x, y) = 240x³/85/8 Suppose $200,000 is available for both labor and equipment. (a) How should the money be allocated between labor and equipment to generate the largest possible output? What is the largest pos- sible output? (b) Use the marginal productivity of money to estimate the change in the maximum output of the factory that will result if money available for labor and equipment is increased to $210,000.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.10P

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