Consists of complex bricks and basic bricks

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Reference no: EM131090344

Lego boxes: A box of Legos consists of complex bricks and basic bricks. The production function of Lego boxes is assumed to be:

Y = (B1^(2/3))*(B2^(1/3))

Where B1 denotes the number of basic bricks and B2 the number of complex bricks. Boxes of Legos are assembled in Denmark, combining these complex and basic bricks.

Assuming that the Lego company optimizes its production, explain why the relative price of a complex brick relative to a basic brick should be equal to the ratio of marginal product of a complex brick over the marginal product of a basic brick.

Reference no: EM131090344

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