A firm produces according to the following production function: F(L,K)=L0.7K0.3. The price of capital is $3 and the wage rate is $7. What is the optimal combination of labor and capital in order to produce 100 units of output? Multiple Choice L*=50,K*=50 L*=100,K*=50 L*=100,K*=100 L*=10,K*=10

Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter15: Decision Analysis
Section: Chapter Questions
Problem 24P: Translate the following monetary payoffs into utilities for a decision maker whose utility function...
icon
Related questions
Question
A firm produces according to the following
production function: F(L,K)=L0.7K0.3. The
price of capital is $3 and the wage rate is
$7. What is the optimal combination of
labor and capital in order to produce 100
units of output?
Multiple Choice
L*=50,K*=50
L*=100,K*=50
L*=100,K*=100
L*=10,K*=10
Transcribed Image Text:A firm produces according to the following production function: F(L,K)=L0.7K0.3. The price of capital is $3 and the wage rate is $7. What is the optimal combination of labor and capital in order to produce 100 units of output? Multiple Choice L*=50,K*=50 L*=100,K*=50 L*=100,K*=100 L*=10,K*=10
Expert Solution
steps

Step by step

Solved in 2 steps with 3 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials of Business Analytics (MindTap Course …
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning