The Production Function for a Company Is , Where

question 94

Multiple Choice

The production function for a company is , where P is the amount produced given x units of labor and y units of equipment. Each unit of labor costs $800 and each unit of equipment costs $400. Assuming the goal of the company is to minimize cost given a fixed production goal of 9000 units produced, what is the meaning of the Lagrange multiplier ?

• A)The additional units that can be produced if the budget is increased by $1
• B)The amount it would cost the company to produce one more unit
• C)The additional units of labor allowed if the budget is increased by $1
• D)The amount it would cost the company to obtain one additional unit of equipment

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