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A single-product firm intends to produce 30 units of output as cheaply as possible. By using K units of capital and I un
Posted: Wed Jul 06, 2022 5:55 am
by answerhappygod
- A Single Product Firm Intends To Produce 30 Units Of Output As Cheaply As Possible By Using K Units Of Capital And I Un 1 (80.69 KiB) Viewed 16 times
A single-product firm intends to produce 30 units of output as cheaply as possible. By using K units of capital and I units of labor, it can produce √K + L units. Suppose the prices of capital and labor are 1 and $20, respectively. The firm's problem is: min K + 20L s. t. √K + L = 30 Find the optimal choices of K and L. You will get points for specifying the: 1. Lagrangean of the problem (Note: There is no need to convert the problem into a maximization of the negative of c(K, L).) 2. First order necessary conditions 3. Second order sufficient conditions (for local optimizer) 4. Value of the objective function at (K*, L*)