In: Economics
There is a firm who manufacturers and uses capital (K) and labor (L) to product output Q such that Q=10KL. The unit price for K and L are w = $15 and r = $5, respectively.
1).Does the firm’s production exhibit decreasing, constant, or increasing returns to scale?
2)What is the optimal input bundle (K*, L*) to produce 480 unit of output?
3)Derive the long run cost function.