A manufacturer has $600 to spend on the production of a certain product and knows that if "x" units of capital and y units of labor are allocated to production, then "P" units will be produced with P(x.y)=120x4/5y1/5, Assume that each unit of capital costs $3 and each unit of labor power costs $5. Use Lagrange multipliers to find how many units of capital and labor power should be used in order to maximize output.

A manufacturer has $600 to spend on the production of a certain product and knows that if "x" units of capital and y units of labor are allocated to production, then "P" units will be produced with P(x.y)=120x4/5y1/5, Assume that each unit of capital costs $3 and each unit of labor power costs $5. Use Lagrange multipliers to find how many units of capital and labor power should be used in order to maximize output.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

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