Answer to Question #90234 in Microeconomics for judith jasmine

Question

Given that the total cost of producing a tin of milk is TC=wL+rK, where w,l,r and k are rent,labor,rent and capital, Find the maximum amounts of capital and labor required to produce a tin of milk?

Answer 1

The amount of labour and capital used in production is optimal and maximizes output when MPL/w = MPK/r, where MPL and MPK are marginal product of labour and capital.