Do you think it is possible to depict this production function with an isoquant? Justify your answer by explaining the concept of an isoquant.
Do you think it is possible to depict this production function with an isoquant? Justify your answer by explaining the concept of an isoquant.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 40P
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Question
A firm's short-run production function is given with Q(K, L) = L0.2* K2 . Capital is fixed with K=3. The price of capital is r = 0.1 and the price of labour is w = 4 The price of the final output is p = 8
a) Do you think it is possible to depict this production function with an isoquant? Justify your answer by explaining the concept of an isoquant.
b) Calculate the optimum quantity of labour the firm should use if it wants to maximize its profit. Also calculate the output produced and the corresponding profit.
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