Answer to Question #220076 in Microeconomics for Sbuda

Question

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

Answer 1

Solution:

C = wL + rK

The cost minimizing quantity of Labor (L):

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

 

The cost minimizing quantity of Capital (K):

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