Suppose the production function for T-shirts can be represented as q = L0.25K0.75. a. When K =
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Question:
Suppose the production function for T-shirts can be represented as q = L0.25K0.75.
a. When K = 1 and q = 2, how many labor is used?
b. When K = 1 and q = 2, what is the slope of the isoquant?
c. Given that price of labor is 5 and price of capital is 10, is current usage of K and L optimal? if not, how should it be adjusted?
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