Suppose that widgets can be produced using two different production techniques, A and B.The following table provides the total input requirements for each of five different total outputlevels.
| |
Q1
K L |
Q2
K L |
Q3
K L |
Q4
K L |
Q5
K L |
|
| A |
2 5 |
1 10 |
5 14 |
6 18 |
8 20 |
|
| b |
5 2 |
8 3 |
11 4 |
14 5 |
16 6 |
|
a. Assuming that the price of labor (PL) is $1 and the price of capital (PK) is $2, calculatethe total cost of production for each of the five levels of output using the optimal (leastcost)technology at each level
.b. How many labor hours (units of labor) would be employed at each level of output? Howmany machine hours (units of capital)?