Question: 1a) A firm estimates its production function as Q = -2.4 + 20*L -.5*L 2 + 30*K -1.00*K 2 + 15*F -.3*F 2 . Total
1a) A firm estimates its production function as Q = -2.4 + 20*L -.5*L2 + 30*K -1.00*K2 + 15*F -.3*F2. Total cost is TC = $2*L + $2.5*K + $1.75*F. The firm wishes to produce 400 units of output. Use Excel to find the cost minimizing amounts of L, K and F. How much F (Fuel) should the firm use?
1b) A firm estimates its production function as Q = -2.4 + 20*L -.5*L2 + 30*K -1.00*K2 + 15*F -.3*F2. Total cost is TC = $2*L + $2.5*K + $1.75*F. The firm can sell all the output it wishes at $200 per unit. Use Excel to find the cost minimizing and profit-maximizing amounts of L, K and F. How much F (Fuel) should the firm use?
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