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0.7 The Cobb-Douglas production function for a particular product is N(x,y) = 80xyo, where x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $80 and each unit of capital costs $120. Answer the questions (A) and (B) below. (A) If $400,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product

0.7 The Cobb-Douglas production function for a particular product is N(x,y) = 80xyo, where x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $80 and each unit of capital costs $120. Answer the questions (A) and (B) below. (A) If $400,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product

Microeconomics A Contemporary Intro
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section7.A: Appendix: A Closer Look At Production And Cost
Problem 1AQ
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0.7. The Cobb-Douglas production function for a particular product is N(x,y) = 80x0.yo.3, where x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $80 and each unit of capital costs $120. Answer the questions (A) and (B) below. (A) If $400,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product.
Transcribed Image Text:0.7. The Cobb-Douglas production function for a particular product is N(x,y) = 80x0.yo.3, where x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $80 and each unit of capital costs $120. Answer the questions (A) and (B) below. (A) If $400,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product.
(A) If $200,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. Production will be maximized when using units of labor and lunits of capital. The maximum production is approximately lunits. (Round to the nearest integer as needed.) (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product. The marginal productivity of money is approximately. (Round to four decimal places as needed.) The increase in production is approximately lunits. (Round to the nearest unit as needed.)
Transcribed Image Text:(A) If $200,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. Production will be maximized when using units of labor and lunits of capital. The maximum production is approximately lunits. (Round to the nearest integer as needed.) (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product. The marginal productivity of money is approximately. (Round to four decimal places as needed.) The increase in production is approximately lunits. (Round to the nearest unit as needed.)
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