Suppose that you have estimated the following output function where L is labor and K is...
Suppose that you have estimated the following output function where L is labor and K is capital:
Y = K1/4L1/2
You know that the current price of labor is $10 and capital cost is $1 per per machine (capital). You currently use 81 units (machines) of capital (K). The price of the output is $20 (y).
Given a fixed level of capital (K=81), and a price of $20 per unit of output, what is the level of output you will produce? Calculate the profit given the optimal number of employees and at what number of employees would you maximize output but not lose money.
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Suppose that you have estimated the following output function
where L is labor and K is...
3) Suppose that you have estimated the following output function where L is labor and K...
3) Suppose that you have estimated the following output function where L is labor and K is capital: Y = K1/4L1/2 You know that the current price of labor is $10 and capital cost is $1 per per machine (capital). You currently use 81 units (machines) of capital. The price of the output is $20 As we compete both internationally and within markets, the challenge of wages and technology create a balancing act relative to the capital/labor ratio....
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A factory produces output (Q) using capital (K) and labor (L) according to the production function...
A factory produces output (Q) using capital (K) and labor (L) according to the production function Y(K,L)=K1/5*L4/5 Let r denote the price per unit capital, and w denote the price per unit labor, so that the total expenditure on these factors is rK + wL. a) As the factory manager, you have been told to produce 625 units of output. Give the equation for the relevant isoquant, written with L as a function of K. b) If r = 80...
2. Suppose that a firm’s production function is Q = 10 L½ K½ and the unit...
2. Suppose that a firm’s production function is Q = 10 L½ K½ and the unit cost of labor is $20, capital is $80, and the product price is $12 per unit. The firm is currently producing 100 units of output and has determined that its cost minimizing quantities of labor and capital usage for this level of output is 20 and 5 respectively. The product price is $12 per unit. a. Determine the current total cost for 100 units,...
A firm can manufacture a product according to the production function: Q = F(K, L) =...
A firm can manufacture a product according to the production function: Q = F(K, L) = K3/4L1/4. Instruction: Enter your responses rounded to three decimal places. a. Calculate the average product of labor, APL, when the level of capital is fixed at 81 units and the firm uses 16 units of labor. ____ What is the average product of labor when the firm uses 256 units of labor? ____ Instruction: The second response is the exponent on L in the...
Suppose a production function is given by F(K, L) = KL2 ; the price of capital is $10 and the price of labor is $15. Wha...
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