Producer Theory A firm has the following Production Function: Q=3K³L² and w = P₁ = $10 r=Px=$90 a) If the profit maximizing firm is committed to producing output Q = 6300 units at least cost, what are the optimal amounts of capital and labour the firm should employ?

Producer Theory A firm has the following Production Function: Q=3K³L² and w = P₁ = $10 r=Px=$90 a) If the profit maximizing firm is committed to producing output Q = 6300 units at least cost, what are the optimal amounts of capital and labour the firm should employ?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 2P

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Question

b) What is the total cost of production?
c) Illustrate your answer.
K
I
L

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Step 1: Definition of production function

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Step 2: Marginal product of capital and labor

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Step 3: Part a, calculate the least cost combination

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Step 4: Part b. Total cost of production:

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Step 5: Part c. Graph showing isocost and isoquant is given below.

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