Question 29 A farmer uses L units of labor and K units of capital to produce Q units of corn using a production function F(K,L). A production plan that uses K' = L' = 10 to produce Q' units of corn where Q' < F(10, 10) is said to be technically unfeasible and efficient. technically feasible and inefficient. technically unfeasible and inefficient. none of the above technically feasible and efficient.
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Step 1: The production plan uses K' = L' = 10, which means the farmer is using 10 units of labor and 10 units of capital. Show more…
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A firm plans to produce 1,000 units per day of good X. The firm's production engineer finds two technically efficient processes (i.e., input combinations of labor and capital) to produce 1,000 units per day: a. If the production function for the existing technology is Q = f(L, K), where Q is the maximum possible output, L is the amount of labor used, and K is the amount of capital used, then f(10, 20) = _________ and f(8, 25) = _________. b. If the firm must pay $200 per day for a unit of labor and $100 per day for a unit of capital, which process is economically efficient? c. If the firm must pay $250 per day for a unit of labor and $75 per day for a unit of capital, which process is economically efficient? d. "No matter what input prices prevail, as long as the firm employs either process 1 or process 2, it will be technically efficient." Evaluate this statement.
Rashmi S.
Also, check if this extreme value is a maximum or minimum. 3. A production function is Q = 12L^0.5 K^0.5. Find the values of L and K which minimizes costs when labour cost ₹ 25 per unit, capital costs ₹ 50 per unit and when the production is constrained at 240 units. 4. A producer desires to minimize his cost of production C = 2L + 5K where L and K are the inputs, subject to the satisfaction of the production function Q=LK. Find the optimum combination of L and K in order to minimize the cost of production when output is 40.
Madhur L.
(a) Suppose the production function is Q = min {K, 2L}. How much output is produced when 4 units of labor and 9 units of capital are employed? Please explain. (b) You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MPL = 20, and MPK = 40, is the firm minimizing costs? If not, should the firm use more labor and less capital, or less labor and more capital?
Andrew D.
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