For the production function Q = K0.7L0.6 and thebudget 122 = 4K + 4L find the NEW LEVEL ofthe cost (budget) for the new optimalemployment of capital (K) and labor (L) in thelong run after output has change by a factor of2.0.Please enter your response as a positive numberwith 1 decimal and 5/4 rounding (e.g. 1.15 = 1.2,1.14 = 1.1).

Production function : Q = K0.7 L0.6Budget : 122 = 4K + 4L Therefore ,Price of capital = 4Price of…

Answered: For the production function Q =…

For the production function Q = K0.7L0.6 and the budget 122= 4K + 4L find the NEW LEVEL of the cost (budget) for the new optimal employment of capital (K) and labor (L) in the

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 9E

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Question

For the production function Q = K0.7L0.6 and the
budget 122 = 4K + 4L find the NEW LEVEL of
the cost (budget) for the new optimal
employment of capital (K) and labor (L) in the
long run after output has change by a factor of
2.0.
Please enter your response as a positive number
with 1 decimal and 5/4 rounding (e.g. 1.15 = 1.2,
1.14 = 1.1).

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