Suppose That a Farmer Grows Corn

question 68

Multiple Choice

Suppose that a farmer grows corn. The farmer's production function is Q(K,L) = 5K^0.4L^0.6, where K is the number of harvesters and L is the number of farmworker labor hours. The prevailing wage rate is $8 per hour and the rental rate associated with harvesters is $75. The farmer has a goal of delivering 100,000 bushels of corn to market. What Lagrangian equation can be used to solve the farmer's cost minimization problem?

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Definitions:

Market Wage Rate

The prevailing rate of pay offered for a certain job in the labor market, which can vary based on location, industry, and job requirements.

Bricklayers

Tradespeople who lay bricks to construct brickwork. This involves setting bricks in mortar to build walls, partitions, chimneys, and other structures.

Equilibrium Market Wage

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price point, during a specific time period.