Question #74182

Find the equilibrium of L and K subject to a given output: (10)
Minimize cost: C = 40K+ 20L Subject to Q = 60 L K= 3000

Expert's answer

1) So, L*K = 3000, L = 3000/K;

2) C = 40K + 20L, for minimizing cost we should get that MC K = 40, MC L = 20;

3) L/K = MC L / MC K = 20/40 = 0.5, L = 0.5*K

0.5*K = 3000/K, K = 77.5, L = 38.7

C = 40 * 77.5 + 20 * 38.7 = 3874

2) C = 40K + 20L, for minimizing cost we should get that MC K = 40, MC L = 20;

3) L/K = MC L / MC K = 20/40 = 0.5, L = 0.5*K

0.5*K = 3000/K, K = 77.5, L = 38.7

C = 40 * 77.5 + 20 * 38.7 = 3874

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