Suppose that a firm's production function is: 112- q = 10L0.5K0.5 98- Its marginal product functions are: 84- MP, = 5K0.5/L0.5 = 0.5g/L 70- and MPK = 5L0.5/K0.5 = 0.5q/K. 56- The cost of a unit of labor, w, is $50 and the cost of a unit of capital, r, is $50. Isoquants for output of 140 and 280 are illustrated in the figure to the right. 42- 28- Initially, the firm is producing 140 units of output and has determined that the cost-minimizing quantities of labor and capital are 14 and 14, respectively. 14- Suppose now that the firm wants to increase output to 280 units. If capital is fixed in the short run, how much labor will the firm require? q= 280 요후 140 98 0- 14 28 42 56 70 84 112 K, Units of capital

Suppose that a firm's production function is: 112- q = 10L0.5K0.5 98- Its marginal product functions are: 84- MP, = 5K0.5/L0.5 = 0.5g/L 70- and MPK = 5L0.5/K0.5 = 0.5q/K. 56- The cost of a unit of labor, w, is $50 and the cost of a unit of capital, r, is $50. Isoquants for output of 140 and 280 are illustrated in the figure to the right. 42- 28- Initially, the firm is producing 140 units of output and has determined that the cost-minimizing quantities of labor and capital are 14 and 14, respectively. 14- Suppose now that the firm wants to increase output to 280 units. If capital is fixed in the short run, how much labor will the firm require? q= 280 요후 140 98 0- 14 28 42 56 70 84 112 K, Units of capital

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section7.A: Appendix: A Closer Look At Production And Cost

Problem 1AQ

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