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Productivity. The research department of a manufacturing company arrived at the following Cobb-Douglas production function for a particular product:
In this equation, x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $30 and each unit of capital costs $60.
- (A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production.
- (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $80,000 is budgeted for the production of the product.
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Calculus for Business, Economics, Life Sciences, and Social Sciences (14th Edition)
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