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14 March, 10:29

Suppose the production of solar powered lawn mowers is characterized by the production function Q = LE, where Q represents the number of ornaments produced. Suppose that the price of labor is $10 per unit and the price of energy is $1 per unit. Find the cost-minimizing combination of labor and energy for a manufacturer that wants to produce 121,000 lawn mowers.

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  1. 14 March, 11:13
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    110 labor and 1100 energy

    Cost of 2,200 dollars

    Explanation:

    Q = L x E

    Cost = 10 L + E

    We use Excel solver tool to get this

    A B C

    1 Labor Energy

    2 Quantity 110 1100

    3 Cost 10 1

    4 output 121,000 (B2 * C2)

    5 cost 2,200 (B2*B3 + C2*C3)

    we want to minimize B5 (cost)

    changing the quantities (b2:c2)

    with the constrain that output b4 = 121,000
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