COMM 220 Lecture Notes - Lecture 7: Isoquant, Production Function, John Molson School Of Business

• School: Concordia University
• Department: Commerce
• Course: COMM 220
• Professor: Krista Riley

Document Summary

The production function of widgets can be expressed as: q = 50k1. 25l0. 5, where q = units of widgets per month, k = capital input (units of machine hour), and l = labour input (units of worker hour). Equipment needed for this operation can be rented at per hour, and labour can be hired at per worker hour. The: find the marginal rate of technical substitution, determine the optimal input mix to produce an output of 20,000 units. Compute the cost of production: suppose the rate of worker hour increases to . Calculate the cost of production: suppose the cost of production remains constant as in part (b) and the worker hour rate is . Cost of production = 25l + 100k = 25*42. 9231 + 100*26. 8270 = ,755. 7775: the worker hour rate = . Q = 20000 = 50k1. 25l0. 5 = 50l1. 25l0. 5 = 50l1. 75. L = 20000/50l1. 75 = 30. 6825 units = k.