Solved: The total production of a certain product depends on the amount of labor used
Chapter 14, Problem 21(choose chapter or problem)
The total production of a certain product depends on the amount of labor used and the amount of capital investment. In Sections 14.1 and 14.3 we discussed how the CobbDouglas model follows from certain economic assumptions, where and are positive constants and . If the cost of a unit of labor is and the cost of a unit of capital is , and the company can spend only dollars as its total budget, then maximizing the production is subject to the constraint . Show that the maximum production occurs when L and pm K 1 pn L
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