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Problem: Given Q= 10 (LK)0.5 , Q is a output per hour, L in the number of workers per hour, and K is the number of machines used per hour. Wage per worker: $80 per hour and Price of a machine: $20 per hour.
Required:
Question 1: Find the optimal combination of input. How much L and K need in order to produce 800 units per hour. How much that would cost?
Question 2: Suppose that the wage rate increases to $100 per hour and the price of a machine increase to $25 per hour. How many workers and machines should be used to produce 1000?
Question 3: Suppose that a new process changes the production function to Q = 20 L0.4 K0.6. If input prices remain the same, how many workers and machines should be used to produce 1000 units and how much that would cost?
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