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Assume a company has the following production function: Q = 100 K.5 L1 . Currently, the company hires 1,000 workers and employs 100 units of capital. The "wage" of capital and labor are $50 and $300 respectively.

a. How many units will the firm be producing?
b. If the marginal product of capital is 500 while that for labor is 1000, what would you suggest about the current mix of labor and capital?
c. Would you suggest this firm merge with similar firms? Explain.

 

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9311200

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