Question: For the production function f (x, y) = 60x 3/4 y 1/4 considered in Example 8, think of f (x, y) as the revenue when
For the production function f (x, y) = 60x3/4y1/4 considered in Example 8, think of f (x, y) as the revenue when x units of labor and y units of capital are used. Under actual operating conditions, say, x = a and
is referred to as the wage per unit of labor and
is referred to as the wage per unit of capital. Show that
(This equation shows how the revenue is distributed between labor and capital.)
y = b, - (a, b) af ax
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