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Computing the capital-labor ratio

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Supposed that the firm producing leather bags has a production function of  Q=5K1/3L2/3, where Q stands for quantity produced, K stands for capital and L stands for labor. The marginal product of labor is (10/3)(K/L)1/3 while the marginal product of capital is (5/3)(L/K)2/3.

  • Supposed that wage is equal to 150 Php and the rent of capital is 300 Php. What will be the capital-labor ratio assuming the firm follows the least cost rule?
  • Suppose that the firm has a fixed capital of 27 units. How many laborers should the firm hire if the current price of a leather bag is 300 Php?
  • What is the marginal product of labor in letter b?
  • What is the marginal revenue product  of capital in letter b?

Reference no: EM132445490

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