Suppose that output Q is produced with the production function Q = f(K,L), where K is...

Suppose that output Q is produced with the production function Q = f(K,L), where K is the number of machines used, and L the number of workers used. Assuming that the price of output p and the wage w and rental rate of capital r are all constant, what would the proﬁt maximizing rules be for the hiring of L and K?
(b) What is the MRTSK,L for the following production function: Q = 10K4L2? Is this technology CRS, IRS or DRS? How do you know?
(c) If the production function was Q = 4KL1/2, what are the conditional demand functions for K and L? Find the cost function C(w,r,Q) for the production function in part (a). Show 3 general properties of cost functions hold for this cost function. (d) Suppose you know the cost function is C(w,r,Q) = 2wQ + rQ 2 . Can you determine the returns-to-scale of the technology? If so, what is it?

Expert Solution

Suppose that output Q is produced with the production function Q = f(K,L), where K is the number of machines used, and L the number of workers used. Assuming that the price of output p and the wage w and rental rate of capital r are all constant, what would the proﬁt maximizing rules be for the hiring of L and K?

Rahul Sunny answered 7 months ago

Suppose that output Q is produced with the production function Q = f(K;L), where K is...

Suppose that output Q is produced with the production function Q = f(K;L), where K is the number of machines used, and L the number of workers used. Assuming that the price of output p and the wage w and rental rate of capital r are all constant, what would the prot maximizing rules be for the hiring of L and K? (b) What is theMRTSK;L for the following production function: Q = 10K4L2? Is this technology CRS, IRS or...

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