Suppose that Bill and Ben produce flowerpots with the use of capital and labor according to...

 

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Suppose that Bill and Ben produce flowerpots with the use of capital and labor according to the production function: Q=F(K,L) = 4KL The firm pays $8 per unit of capital and $4 per unit of labor. (i) (4 points) Compute the average products of labor and capital. (ii) (6 points) Compute the marginal rate of technical substitution of labor for capital. (iii) (15 points) If Bill and Ben want to produce Q flower pots, what is the cheapest way to do so? (In other words, how many workers and machines should it employ in order to minimize costs subject to producing Q flower pots?) (iv) (5 points) What is the cost function of Bill and Ben as a function of Q? Suppose that Bill and Ben produce flowerpots with the use of capital and labor according to the production function: Q=F(K,L) = 4KL The firm pays $8 per unit of capital and $4 per unit of labor. (i) (4 points) Compute the average products of labor and capital. (ii) (6 points) Compute the marginal rate of technical substitution of labor for capital. (iii) (15 points) If Bill and Ben want to produce Q flower pots, what is the cheapest way to do so? (In other words, how many workers and machines should it employ in order to minimize costs subject to producing Q flower pots?) (iv) (5 points) What is the cost function of Bill and Ben as a function of Q?

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I To compute the average products of labor and capital we divide the total product by the respective inputs The total product of labor TPL is given by ... View the full answer