Answer to Question #199428 in Economics for fatima

Question

Let K=10, L=5, P_K=10, P_L=25 and [LTC=P_K×K+P_L×L]. If inputs (K, L) are doubled, the output increases from 100 to 200. Find the value of LAC after doubling of inputs.

Answer 1

If inputs (K, L) are doubled, and the output increases from 100 to 200, then the value of LAC after doubling of inputs is: $LAC = LTC/Q = (10×20 + 25×10)/200 = 2.25.$