Brian uses wool (K) and labour (L) to produce t-shirts (q). The production function is: q = min{1/3L, 2K}. The inputs are perfect complement. If he uses 0.5 kg of wool and 3 hours of labour, he can produce 1 t-shirt. Draw an expansion path on a diagram and derive an expression for the expansion path. How does it depend on the wage and the price of wool?
Brian uses wool (K) and labour (L) to produce t-shirts (q). The production function is: q = min{1/3L, 2K}. The inputs are perfect complement. If he uses 0.5 kg of wool and 3 hours of labour, he can produce 1 t-shirt. Draw an expansion path on a diagram and derive an expression for the expansion path. How does it depend on the wage and the price of wool?
Chapter7: Proudction Costs
Section: Chapter Questions
Problem 10SQ
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Brian uses wool (K) and labour (L) to produce t-shirts (q).
The production function is: q = min{1/3L, 2K}. The inputs are perfect complement.
If he uses 0.5 kg of wool and 3 hours of labour, he can produce 1 t-shirt.
Draw an expansion path on a diagram and derive an expression for the expansion path. How does it depend on the wage and the price of wool?
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