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7.28. A plant's production function is Q = 2KL + K. For this production function, MPg=2L +1 and MP = 2K. The price of labor services w is $4 and of capital services r is $5 per unit. a) In the short run, the plant's capital is fixed at K = 9K = 9. Find the amount of labor it must employ to produce Q= 45 units of output. b) How much money is the firm sacrificing by not having the ability to choose its level of capital optimally?

7.28. A plant's production function is Q = 2KL + K. For this production function, MPg=2L +1 and MP = 2K. The price of labor services w is $4 and of capital services r is $5 per unit. a) In the short run, the plant's capital is fixed at K = 9K = 9. Find the amount of labor it must employ to produce Q= 45 units of output. b) How much money is the firm sacrificing by not having the ability to choose its level of capital optimally?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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7.28. A plant's production function is Q = 2KL + K. For this production function, MPK= 2L + 1 and MP, = 2K. The price of labor services w is $4 and of capital services r is $5 per unit. a) In the short run, the plant's capital is fixed at K b) How much money is the firm sacrificing by not having the ability to choose its level of capital optimally? 9K = 9. Find the amount of labor it must employ to produce Q= 45 units of output. %3D
Transcribed Image Text:7.28. A plant's production function is Q = 2KL + K. For this production function, MPK= 2L + 1 and MP, = 2K. The price of labor services w is $4 and of capital services r is $5 per unit. a) In the short run, the plant's capital is fixed at K b) How much money is the firm sacrificing by not having the ability to choose its level of capital optimally? 9K = 9. Find the amount of labor it must employ to produce Q= 45 units of output. %3D
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