A cost-minimizing firm's production function is given by Q = LK, where MPL = K and MPK

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A cost-minimizing firm's production function is given by Q = LK, where MPL = K and MPK = L. The price of labor services is w and the price of capital services is r. Suppose you know that when w = $4 and r = $2, the firm's total cost is $160. You are also told that when input prices change such that the wage rate is 8 times the rental rate, the firm adjusts its input combination but leaves total output unchanged. What would the cost-minimizing input combination be after the price changes?
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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