Suppose That a Firm's Production Function Is Given by Q

question 27

Essay

Suppose that a firm's production function is given by Q = KL (MP_K = L and MP_L = K), where Q is quantity of output, K is units of capital, and L is units of labor. The price per unit of labor and capital are $30 and $20, respectively.
a. How many units of labor and capital should the firm use if it wants to minimize the cost of producing 600 units of output?
b. Suppose that the firm makes a technological change, transforming its production function to Q = 1.23KL (MP_K = 1.23L and MP_L = 1.23K). What is the minimum cost of producing 600 units of output?

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Definitions:

Subclavian Artery

A major artery located beneath the clavicle that supplies blood to the upper limbs, neck, and brain.

Brachial Artery

The major blood vessel of the upper arm, responsible for supplying oxygenated blood to the arm and hand.

Ulnar Artery

A major artery of the forearm that runs along the ulna bone and supplies blood to the forearm and hand.

Offshoring

The practice of relocating business processes or services to a foreign country to reduce costs or take advantage of favorable regulations.