A Production Process Using Two Inputs, Labor and Capital, Can

question 25

Essay

A production process using two inputs, labor and capital, can be written as:
Q = 5LK MP_K = 5L MP_L = 5K
where Q represents output per day (tons). The unit costs of inputs are $150 for labor (L) and $1,000 for capital (K). Determine the least cost combination of L and K when output is produced at the rate of 1,000 tons per day. Determine the required outlay for 1,000 tons per day.

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