A profit maximizing firm produces output using capital, K, and labour, L, in the following production technology: Y = 2*K^0.5*L^0.5 The cost function of the firm is: C = w*L + r*K where r=1.3. You are told that the firm employs L = 49 workers. Find the optimal capital stock, K*. (State your answer to 2 decimal places.)
A profit maximizing firm produces output using capital, K, and labour, L, in the following production technology: Y = 2*K^0.5*L^0.5 The cost function of the firm is: C = w*L + r*K where r=1.3. You are told that the firm employs L = 49 workers. Find the optimal capital stock, K*. (State your answer to 2 decimal places.)
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.3P
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A profit maximizing firm produces output using capital, K, and labour, L, in the following production technology:
Y = 2*K^0.5*L^0.5
The cost function of the firm is:
C = w*L + r*K
where r=1.3.
You are told that the firm employs L = 49 workers.
Find the optimal capital stock, K*.
(State your answer to 2 decimal places.)
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