Answer to Question #220076 in Microeconomics for Sbuda

Question #220076

If cost function is C=wL + rK. Specify quantities of capital and labour that minimise costs?

Expert's answer

Solution:

C = wL + rK

The cost minimizing quantity of Labor (L):

"L = \\frac{C - rK}{w}"

The cost minimizing quantity of Capital (K):

"K = \\frac{C - Lw}{r}"

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