The manager of a meat-packing plant can use either butchers (labor) or meat saws (capital) to prepare packages of sirloin steak. Based on estimates provided by an efficiency expert, the firm's production function for sirloin steak is given by Q=K+L.

b. What is the marginal product of capital and labor? Does the answer depend on how much labor and capital are used?

c. If the price of labor is $2 per hour and the rental price of capital is $3 per hour, how much capital and labor should be used to minimize the cost of production?

The manager of a meat-packing plant can use either butchers (labor) or meat saws (capital) to prepare packages of sirloin steak. Based on estimates provided by an efficiency expert, the firm's production function for sirloin steak is given by Q=K+L.
a. Graph the linear production function corresponding to 5 units of output.
b. What is the marginal product of capital and labor? Does the answer depend on how much labor and capital are used?
c. If the price of labor is $2 per ...

Solution Summary

Cost minimizing input combination is discussed in this solution, which is given in brief, step by step instruction.

Production Function (Capital/Labor) Ratio. Can you ... microeconomics problems. The problems include the price of capital and labor and K/L ratios. ...

... The amount of total output produced from various combinations of labor and capital. ... Total output for capital stock=1 and labor=2 units is 110 units. ...

The "wage" of capital and labor are $500 and $800 respectively, what would you suggest would be the firm's mix of labor and capital if it produces 2,000,000 ...

... (c) Assuming that capital (K) is held constant at 2 machines and MPPK/MRCK = 10, what is the least-cost input-combination of labor and capital and how much ...

... This solution is comprised of answers related with Investment, time, and capital markets. What equation do I use to determine how much labor the firm should ...

... There are three inputs: labor, capital, and energy. ... Conclusion: Only energy productivity increased whereas labor and capital productivity measures decreased. ...

... The capital labor ratio is N/K: For year 1: N/K = 200/ 1000= 1/5 For year 2: N/K = 250/ 1000=1/4 For year 3: N/K = 250/1250 =1/5 For year 4: N/K = 300/1200=1/4. ...