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# Assuming the production function: Q = 2.5L0.4 K0.6 , a wage rate of \$24 and a rental rate of \$18.

Assuming the production function: Q = 2.5L0.4 K0.6 , a wage rate of \$24 and a rental rate of \$18.

a. What is the least costly combination of L and K needed to produce 1000 units?

b. What is the cost of the bundle found in sub-question a?

c. What is the least costly combination need to produce 2000 units?

d. Please illustrate the relationship of L, K, Q in a carefully labelled diagram. (Please use the information from sub-questions a and c)

e. How would your answer to sub-question a change if the rental rate increased to \$24?

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