Suppose the Production Function for a Small Plumbing Company Is

question 107

Essay

Suppose the production function for a small plumbing company is:
Q = 6KL
where Q is the number of water heaters installed, K is the number of machine hours from plumbing supplies, and L is the number of plumbers.
a. Suppose that the wage rate is $20 per hour and the rental rate of capital is $30 per hour. If the construction company has a contract to install 100 new water heaters, what is the cost-minimizing bundle of capital and labor?
b. Derive the company's expansion path.

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