Question: A plant's production function is Q = 2KL + K . For this production function, MPK = 2L + 1 and MPL = 2K. The

A plant's production function is Q = 2KL + K . For this production function, MPK = 2L + 1 and MPL = 2K. The price of labor services w is $4 and of capital services r is $5 per unit.
a) In the short run, the plant's capital is fixed at K = 9. Find the amount of labor it must employ to produce Q = 45 units of output.
b) How much money is the firm sacrificing by not having the ability to choose its level of capital optimally?

Step by Step Solution

★★★★★

3.33 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Since we get which implies that L 3618 2 Therefore the firms total cost with this inp... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

846-B-E-D-S (2205).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

A firm's production function is Q = 5L2/3K1/3 with MPK = (5/3)L2/3K2/3 and MPL = (10/3)L1/3K1/3. a) Does this production function exhibit constant, increasing, or decreasing returns to scale? b) What...

In the short run, a firm cannot vary its capital, K = 2, but it can vary its labor, L. It produces output q. Explain why the firm will or will not experience diminishing marginal returns to labor in...

A firm produces output with the production function Q = K LW Where K and L denote its capital and labor inputs, respectively. If the price of labor is 1 and the price of capital is 4, what quantities...

7.28. A plants production function is Q ! 2KL " K. For this production function, MPK ! 2L " 1 and MPL ! 2K. The price of labor services w is $4 and of capital services r is $5 per unit. a) In the...

A manufacturing firm's production function is Q = KL + K + L. For this production function, MPL = K + 1 and MPK = L + 1. Suppose that the price r of capital services is equal to 1, and let w denote...

7.19. A manufacturing firms production function is Q ! KL " K " L. For this production function, MPL ! K " 1 and MPK ! L " 1. Suppose that the price r of capital services is equal to 1, and let w...

Chapter 4 1.Suppose the utility function for a firm manager is U = + bQ, where Q is output, is profit, and b is a positive constant. How would the firm's output compare with what it would be if the...

Question 1. (5 points) Suppose the production of airframes is characterized by a CBS production function: 2 Q = (Li + K%) 1. Show that the marginal products of this production function are M PL 2 (L%...

Suppose a firm has a production function given by Q = L1/2K1/2. Therefore, R-1/2 MP, = and MPK = 21 1/2 2K 1/2 The firm can purchase labor, L at a price w = 9, and capital, K at a price of r = 16. a)...

10. Jake and Paul run a paper company. Each week they need to produce 1,000 reams of paper to ship to their customers. The paper plants longrun production function is Q = 4 K 0.75 L 0.25 , where Q is...

A ball is drawn at random from a box containing 4 red balls, 5 white balls, and 3 green balls. Determine the probability that it is (a) red, (b) white, (c) not white, (d) not green.

An interesting mechanical system with a challenging control problem is the ball and beam. It consists of a rigid beam that is free to rotate in the plane of the paper around a center pivot, with a...

A computerined counse drop - and - add program in being developed for a local community college. it will year life. If inflation is expected to be 4 percent per year for the nest 1 0 years and a teal...

Rina and Gimo are the senior developers in a website development project. They have argued about the best web design product to use in developing the new website. As the project manager, you use a...

Draw the indifference curve for someone deciding how to allocate time between work and leisure. Suppose the wage increases. Is it possible that the persons consumption would fall? Is this plausible?...

Describe the ultimatum game. What outcome from this game would conventional economic theory predict? Do experiments confirm this prediction? Explain.

A case study in this chapter describes how a boyfriend can signal to a girlfriend that he loves her by giving an appropriate gift. Do you think saying I love you can also serve as a signal? Why or...

and why? Thanks! 5.2 Risk and Risk Premiums Which portfolio is more risky? Spreadsheet 5.1 2 Scenario analysis for the stock market Column 8 x Deviation from Column B x Squared Deviation 110.45...

Question 1: Willey Co. wants to calculate its WACC with the following information: -The companys long-term bonds currently offer a yield to maturity of 8% -The companys stock price is $32 per share...

Answer all parts I will upvote!! NPV and IRR Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $25,060, and the project is...