Determine the optimal capital-labor ratio

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Reference no: EM131392233

Acme Container Corporation produces egg cartons that are sold to egg distributors. Acme has estimated this production function for its egg carton division:

Q = 25L^0.6 K^0.4

where Q = output measured in one thousand carton lots,

L = labor measured in person hours, and

K = capital measured in machine hours.

Acme currently pays a wage of $10 per hour and considers the relevant rental price for capital to be $25 per hour. Determine the optimal capital-labor ratio that Acme should use in the egg carton division.

Reference no: EM131392233

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