Find the input combination that will minimize cost of units

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Reference no: EM131482600

Question: 1. A firm has the production function Q = K0.5L0.5 and buys input K at £12 a unit and input L at £3 a unit and has a budget of £600. Use the Lagrange method to find the input combination that will maximize output, checking that second-order conditions are satisfied by using the bordered Hessian.

2. A firm operates with the production function Q = 25K0.5L0.4 and buys input K at £20 a unit and input L at £8 a unit. Use the Lagrange method to find the input combination that will minimize the cost of producing 400 units of Q, using the bordered Hessian to check that second-order conditions are satisfied.

Reference no: EM131482600

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