A firms production function is given by The cost of K=$2 and the...
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Finance
- A firms production function is given by
The cost of K=$2 and the cost of L=$3. Find the value of K and L which minimizes total cost if the production quota (Q) is 1200.
The rule is the same as in the lectures. You have to think of which of the functions is the objective and the constraint. Here, the constraint is the production function and the objective is to minimize cost.
- Write the equation for the total cost (TC)
- Write the production function with the constraint
- What is the maximum value of K and L
- What is the minimum cost required to produce the 1200
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