Answer to Question #74182 in Microeconomics for muhammad sultan

Question

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

Answer 1

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