Suppose that the production function for iPods is Q = 20K0.5L0.5. The marginal product of labor is
Question:
a. Suppose that labor can be hired for $6, and capital can be hired for $9. When the firm is producing 49 units at lowest cost, what will the firm's marginal rate of technical substitution be?
b. Solve for the lowest-cost combination of labor and capital that will allow the firm to produce 49 iPods. Fractional units of labor and capital are certainly permissible.
c. What is the minimum cost of producing 49 iPods?
d. Suppose that the firm has exactly $300 to spend on producing iPods. What is the maximum number of iPods it can produce?
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Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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