Ask Question
23 September, 12:27

Assume a firm's production function is? = K 1 2? 1 2 where Q, L and K are defined. How much labor and capital would be purchased if it seeks to produce 100 units and labor costs $20 per unit and capital each cost $5 per unit?

+1
Answers (1)
  1. 23 September, 15:40
    0
    200 labor

    and 50 units of capital

    Explanation:

    The formula given is Q = K^ (1/2) L^ (1/2)

    Now, considering we want Q = 100

    and the cost formula 20K + 5L

    we should look to minimize the cost using excel solver tool

    1 2 3 4

    A L 200 5 1000 (A2*A3)

    B K 50 20 1000 (B2*B3)

    C 100 2000 (A4 + B4)

    C2 = power (a2; 1/2) * power (b2; 1/2)

    we want to minimize the cost formula (C4)

    considering the restrain that output should be 100

    and that quantity of labor and kapital should be integer.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Assume a firm's production function is? = K 1 2? 1 2 where Q, L and K are defined. How much labor and capital would be purchased if it ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers