Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a firm must fulfill an order of 100 units of q. th

A firm must fulfill an order of 100 units of q. They can convert two...

90.2K

Verified Solution

Question

Accounting

image

A firm must fulfill an order of 100 units of q. They can convert two inputs, K and L, into output via the production function F(K,L)=10ln(KL). Every unit of K that they use costs $10. Every unit of L costs $40. The firm wants to minimize their production costs subject to fulfilling the order. Based on the above information, answer the following questions. (a) What is the objective function that the firm is minimizing? (2 marks) (b) What is the constraint that the firm is facing? (2 marks) (c) Write down a Lagrangian that represents the firm's constrained optimization problem. (2 marks) (d) What is the optimal amount of K and L that the firm should use? Show that this is a global minimum. (6 marks)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students