Question: Assume Kodaks production function for digital cameras is given by Q = 100(L 0.7 K 0.3 ), where L and K are the number of

Assume Kodak’s production function for digital cameras is given by Q = 100(L0.7 K0.3), where L and K are the number of workers and machines employed in a month, respectively, and Q is the monthly output. Moreover, assume the monthly wage per worker is $3,000 and the monthly rental rate per machine is $2,000. Given the production function, the marginal product functions are MP L = 70(L-0.3 K0.3) and MPK = 30(L0.7 K-0.7). 

a. If Kodak needs to supply 60,000 units of cameras per month, how many workers and machines should it optimally employ? 

b. What are the total cost and average cost of producing the quantity given in (a)?

Step by Step Solution

3.45 Rating (165 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

a Kodak should minimize the total cost of producing the 60000 cameras given the production function ... View full answer

blur-text-image
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 (2 attachments)

PDF file Icon

1436_6054778aade59_648523.pdf

180 KBs PDF File

Word file Icon

1436_6054778aade59_648523.docx

120 KBs Word File

Students Have Also Explored These Related Managerial Economics Questions!