Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 4

Recompute your answers to Exercise, assuming that the per-unit cost of labor increases from C L = $2 to C L = $4. How has the increase in the labor rate affected the optimal proportions of labor and capital used in the production process
Exercise
Determine how many units of labor (L*) and capital (K*) are required to produce five units of output (Q 0 ) for the production function given in the
a. Constant returns example.
b. Decreasing returns example.
c. Increasing returns example.