Goleta Brewing Company hires only two types of labor, managers and brewing assistants (denoted M and B, respectively). GBC has the following Cobb-Douglas production function F(M,B) = M.5 B.5 and wants to produce 10 barrels of pale ale this week. If the wage of managers is $50 per hour and the wage of brewing assistants is $10 per hour, how many managers and brewing assistants should the firm hire (round to nearest whole number)? How does your answer change when the wage of managers decreases to $30 per hour and the wage of brewing assistants remains constant. Is this result consistent with your intuition?

Goleta Brewing Company hires only two types of labor, managers and brewing assistants (denoted M and B, respectively). GBC has the following Cobb-Douglas production function F(M,B) = M.5 B.5 and wants to produce 10 barrels of pale ale this week. If the wage of managers is $50 per hour and the wage of brewing assistants is $10 per hour, how many managers and brewing assistants should the firm hire (round to nearest whole number)? How does your answer change when the wage of managers decreases to $30 per hour and the wage of brewing assistants remains constant. Is this result consistent with your intuition?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.1P

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