1. Suppose a good is produced according to the following production function:

Q = L^1/2K^1/2

            so that the marginal product of labor and capital are

                                                MP_L = (1/2)(K/L)^1/2

MP_K = (1/2)(L/K)^1/2

If w = $8 and r = $4, determine the necessary conditions for the input choices, K and E to be cost-minimizing. In other words, what is the cost-minimizing ratio of K to E for this firm? Your answer will be in the form of 2L: 5K. You do not need to solve for specific values of L&K.

Answer rating: 100% (QA)

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