A Firm Produces According to the Following Production Function: Q

question 28

Essay

A firm produces according to the following production function: Q = K0.25L0.75,where Q = units of output,K = units of capital,and L = units of labor.Suppose that the price of K is $4 per unit,and the price of L is $6 per unit.What is the optimal capital/labor ratio?

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Definitions:

Logical Consistency

The attribute of an argument, theory, or system of thought in which all its components fit together without contradiction.

Observation

The active acquisition of information from a primary source.

Empiricism

A philosophy that states knowledge comes primarily from sensory experience.

Behaviourism

A theory of learning which states that all behaviors are acquired through conditioning processes influenced by the environment, without the need for thoughts or feelings.