The following production function describes the production of buttons made of plastic: q = (4K0.5 +L0.5) with K ... machinery, L ... labor. Rents for capital are r = 10000€, each worker costs 5000€ a month. a) Will a labor-capital ratio of 2.5 minimize total production costs in the long run?

The following production function describes the production of buttons made of plastic: q = (4K0.5 +L0.5) with K ... machinery, L ... labor. Rents for capital are r = 10000€, each worker costs 5000€ a month. a) Will a labor-capital ratio of 2.5 minimize total production costs in the long run?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The following production function describes the production of buttons made of plastic:
q = (4K0.5 +L0.5) with K ... machinery, L ... labor. Rents for capital are r = 10000€,
each worker costs 5000€ a month.
a) Will a labor-capital ratio of 2.5 minimize total production costs in the long run?

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