Minimize cost in the long run

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Reference no: EM1311868

Q. Suppose the following equations are true:

Production Function: Q = K^(1/3)L^(2/3),
which means MPK = 1/3K^(-2/3)L^(2/3),
MPL = 2/3K^(1/3)L^(-1/3)
MRTS = 2(K/L)
Total Cost = rK + wL
r = .2
w = $5

A) Currently, K = 100. Illustrate what is the cost of producing 10 units in the short run? First conclude Elucidate how much labor is needed.

B) Given these prices, illustrate what is the optimal ratio of K to L to minimize cost in the long run?

C) Given the optimal ratio, Illustrate what are the optimal quantities of K also L to produce 10 units in the long run?

D) Illustrate what is the total cost of producing 10 units in the long run?

Reference no: EM1311868

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