A monopoly has a Cobb Douglas production function per hour Q (K, L) = K^1/3 L^1/3. The

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A monopoly has a Cobb Douglas production function per hour Q (K, L) = K^1/3 L^1/3. The cost of capital (rent) is $27 per hour and the cost of labor (wage) is $8 per hour. Moreover, this firm has a budget of $432 per hour.

Write down the Lagrangian function for the purpose of maximizing the production for the monopoly.

What are the critical values of K and L?

Verify, by using the second order conditions, that your critical values are indeed maximum.

What is the maximized production for the monopoly?

Related Book For answer-question

Corporate Finance Core Principles and Applications

ISBN: 978-0077905200

3rd edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford

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Posted Date: Aug 08, 2019 02:10 AM

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A monopoly has a Cobb Douglas production function per hour Q (K, L) = K^1/3 L^1/3. The

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Corporate Finance Core Principles and Applications

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