Imagine long run production for the firm is indicated by: Q=f(k,e) where: MPe=k-150 MPk=E-60
In addition, assume the firm's isocost equation is given by: C=wE+rK Where C=$240,000 r=$600 w=$800
1) find out the firm's optimal amount of capital and labor.
2) Suppose wages fall to w=$500. find out the firm's optimal amount of capital and labor in this case.