A firm uses raw material (K is the number of units of raw material used) and labor (L is the number of units of labor used) to produce Soma. It has two possible technologies it can use (and can switch costlessly between them). The first is defined by the production q = f(K, L) = K + 2L. Call this technology F. The other, technology G, is defined by the production function q = g(K, L) = 2K + L. Starting with a wage rate of w = 0 and then increasing it, explain as a function of w, which of the two technologies the firm should deploy. Assume the unit cost of raw material is r = 1.

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KL 34 K 34 4 AP L 81 AP when ... View the full answer