Suppose that widgets can be produced using two different production techniques, A and B. The following table provides the total input requirements for each of five different total output levels. Q = 1 Q=2 Tech. K LK A B Q=3 L K L 4 Q=4 K L 12 7 11 8 8 5 12 7 15 4 1 6 2 9 1 3 2 5 4 Q=5 KL Assuming that the price of labor (PL) is $1 and the price of capital (PK) is $3, calculate the total cost of production for each of the five levels of output using the optimal (least-cost) technology at each level.
Suppose that widgets can be produced using two different production techniques, A and B. The following table provides the total input requirements for each of five different total output levels. Q = 1 Q=2 Tech. K LK A B Q=3 L K L 4 Q=4 K L 12 7 11 8 8 5 12 7 15 4 1 6 2 9 1 3 2 5 4 Q=5 KL Assuming that the price of labor (PL) is $1 and the price of capital (PK) is $3, calculate the total cost of production for each of the five levels of output using the optimal (least-cost) technology at each level.
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.4P
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