The Hormsbury Corporation produces yo-yos at its factory. Both its labor and capital markets are competitive. Wages are $12 per hour, and yo-yo-making equipment (a computer controlled plastic extruding machine) rents for $4 per hour. The production function is  where q = boxes of yo-yos per week, K = hours of yo-yo equipment used, and L = hours of labor. Therefore,  Determine the cost minimizing capital-labor ratio at this firm.

Transcribed Image Text:

9 = 40K0.25L0.75