Question

A boutique investment firm is in the business of producing high value deals for its clients. The production function for the firm takes on the following form:

Q= 3A²+4B²

A is the number of administrative assistants, and B is the number of investment bankers. The wage of an administrative assistant is $56,250 and the wage of an investment banker is $150,000. Each high value deal also requires $100,000 in infrastructure costs per deal. If the firm wants to produce high value deals as cheaply as possible, then what is the cost minimizing ratio of investment bankers to administrative assistants

Answer 1