Business: maximizing production. Southwest Appliances has the following Cobb-Douglas production function for a certain product: p ( x , y ) = 50 x 2 / 3 y 1 / 2 , Where x is labor and y is capital, both measured in dollars. Suppose Southwest can make a total investment in labor and capital of $600,000. How should it allocate the investment between labor and capital in order to maximize production?
Business: maximizing production. Southwest Appliances has the following Cobb-Douglas production function for a certain product: p ( x , y ) = 50 x 2 / 3 y 1 / 2 , Where x is labor and y is capital, both measured in dollars. Suppose Southwest can make a total investment in labor and capital of $600,000. How should it allocate the investment between labor and capital in order to maximize production?
Solution Summary: The author explains how to calculate the allocation of the investment between labor and capital in order to maximize production.
Business: maximizing production. Southwest Appliances has the following Cobb-Douglas production function for a certain product:
p
(
x
,
y
)
=
50
x
2
/
3
y
1
/
2
,
Where x is labor and y is capital, both measured in dollars. Suppose Southwest can make a total investment in labor and capital of $600,000. How should it allocate the investment between labor and capital in order to maximize production?
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