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Title: Acme Container Corporation produces egg cartons that are sold to egg distributors. Acme has ... Post by: corie on Oct 24, 2017 Acme Container Corporation produces egg cartons that are sold to egg distributors. Acme has estimated this production function for its egg carton division:
Q = 25L0.6K0.4, where Q = output measured in one thousand carton lots, L = labor measured in person hours, and K = capital measured in machine hours. Acme currently pays a wage of $10 per hour and considers the relevant rental price for capital to be $25 per hour. Determine the optimal capital-labor ratio that Acme should use in the egg carton division. Title: Re: Acme Container Corporation produces egg cartons that are sold to egg distributors. Acme has ... Post by: LBCea on Oct 24, 2017 MPL = .6(25) L-0.4K0.4 = 15
MPK = .4(25) L0.6K-0.6= 10 MRTS = MRTS = = 1.5 ∙ MRTS = 1.5 Equate MRTS to . 1.5 = 1.5 = 0.4 1.5K = 0.4L; K=0.266L |