Suppose that the production function for Hannah and Sam's home
remodeling business is
Q = F(L,K)
Q = 10L0.2K0.3.
Assume the wage rate is $8,000 per week and the cost of renting a unit of capital is $2,000 per week.
a. What is the least-cost input combination for remodeling 500 square feet each week?
Instructions: Round your answers to 2 decimal places.
units of labor and units of capital.
b. What is the total cost?
Instructions: Round your answer to 2 decimal places.
Least cost input combination is 853.19 units of labour and 5119.18 units of capital. Total cost is $ 17,063,880. The calculations and detailed explanation are in following 3 images:
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