2. Suppose the production function of a firm is given by q=L 1/4 K 2/4 . The...

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2. Suppose the production function of a firm is given by q=L^1/4K^2/4. The prices of labor and capital are given by w = $9 and r= $18, respectively.

a) Write down the firm cost minimization formally.

b) What returns to scale does the production function exhibit? Explain.

c) What is the Marginal Rate of Technical Substitution (MRTS) between capital and labor?

d) What is the optimal capital to labor ratio? Show your work.

Related Book For answer-question

Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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Posted Date: Mar 03, 2024 04:46 AM

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2. Suppose the production function of a firm is given by q=L 1/4 K 2/4 . The...

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Firm Cost Minimization and Production Function Analysis a Cost Minimization Formally The firm wants ... View the full answer

Microeconomics

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