Suppose that a firm has the following production function: Q (K, L) = 2L K. a. If
Question:
Suppose that a firm has the following production function:
Q (K, L) = 2L √K.
a. If the price of labor is 2 and the price of capital is 4, what is the optimal ratio of capital to labor?
b. For an output level of Q = 1000, how much of each input will be used?
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a Optimality requires that MP L MP K wr 24 MP L 2 K MP K LK MP L ...View the full answer
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