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Consider a firm that uses labor (L) and capital (K) to produce a general output (q)...

Consider a firm that uses labor (L) and capital (K) to produce a general output (q) using the following production function:

q = K0.8 L0.2 The firm seeks to produce q = 50 units for sale and faces prices for labor of w = 3 and capital of r = 5.

a) What is the marginal rate of technical substitution?

b) What are the optimal amounts of each input used by the firm?

c) How much does the firm spend?

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