2. Suppose a producer's production function is F(X,L) = 3KL The cost of K is 20 (r=20) and the cost of L is 80 (w = 80) The finn wants to produce 30 units of output. a. What is the cost-minimizing way for the firm to produce 30 units of output? How many units of capital and how many units of labor should be used? b. Suppose the firm has committed itself to 4 units of capital (K) and therefore is operating in the short run. What combination of inputs is the least costly way for it to produce 30 units now?

2. Suppose a producer's production function is F(X,L) = 3KL The cost of K is 20 (r=20) and the cost of L is 80 (w = 80) The finn wants to produce 30 units of output. a. What is the cost-minimizing way for the firm to produce 30 units of output? How many units of capital and how many units of labor should be used? b. Suppose the firm has committed itself to 4 units of capital (K) and therefore is operating in the short run. What combination of inputs is the least costly way for it to produce 30 units now?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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