Question #71252

The production function for superlite sailboats, Inc., is Q=20K^0.5 L^0.5 with marginal product functions MPk=10*L^0.5/K^0.5 and MPL=10*L^0.5/K^0.5.

a. If the price of capital is $5 per unit,determine the expansion path for the firm.

b. The firm currently is producing 200 units of output per period using

input rates of L=4 and K=25. Is this an efficient input combination? Why or why not? If no, determine the efficient input combination for producing an output rate of 200. what is the capital-labor ratio?

c. If the price of labor increases from $4 to $8 per unit, determine the efficient input combination for an output rate of 200. What is the capital labor ratio now? What input substitution has the firm made?

a. If the price of capital is $5 per unit,determine the expansion path for the firm.

b. The firm currently is producing 200 units of output per period using

input rates of L=4 and K=25. Is this an efficient input combination? Why or why not? If no, determine the efficient input combination for producing an output rate of 200. what is the capital-labor ratio?

c. If the price of labor increases from $4 to $8 per unit, determine the efficient input combination for an output rate of 200. What is the capital labor ratio now? What input substitution has the firm made?

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