Compute the optimal amount of capital and labor

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Reference no: EM1371968

Assume long run production for the company 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) Compute the firm's optimal amount of capital and labor.
2) Suppose wages fall to w=$500. Calculate the firm's optimal amount of capital and labor in this case.

Reference no: EM1371968

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