T 1000 k25 175 the marginal product of labor mp 75 25

  • No School
  • AA 1
  • 4

This preview shows page 3 - 4 out of 4 pages.

Givens: 60 * L + 20 * K min L>0, K > 0 s.t. 1000 < K.25 * 1.75 The marginal product of labor: MP, = .75 * :25 The marginal product of capital: MPK = .25 * 576 Equation Description: A firm is attempting to minimize total cost subject to sufficiently employing units of labor and units of capital to produce an output level at least as large as a specified output quota. Total cost equals the cost to employing units of labor plus the cost to employing units of capital. A firm's production function is the product of two terms: the first term is units of capital raised to the 25 power;
Image of page 3
and, the second term is units of labor raised to the 75 power. The marginal product of labor equals the product of three terms: the first term is.75; the second term is units of capital raised to the 25 power; the third term is units of labor raised to the -25 power. The marginal product of capital equals the product of three terms: the first term is 25; the second term is units of labor raised to the 75 power; the third term is units of capital raised to the - 75 power. The wage rate is $60 per unit of labor. The rental rate is $20 per unit of capital. The output quota is 1000 units. Question: What is minimum total cost? $94,000 $26,000 $32,000 $72,000 $48,000 $80,000 $8,000 $100,000
Image of page 4

You've reached the end of your free preview.

Want to read all 4 pages?

  • Fall '19
  • Economics, $10, $20, $8,000, $40, marginal product of labor

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors