The firms has the production function Q (K,L)=30K^.67L^.33, where Q is the hours of edited footage. The firm wants to produce 3,000 units of output (video shorts) at the lowest possible cost. The wage is $25, and the rental rate of capital is $50.
1. Explain what ratio of capital to labor minimizes cost?
2. Discuss how much capital and labor will you need to rent and hire in order to form the 3,000 units of output?
3. Calculate the total cost of hiring these inputs?
4. Graph the isquant and isocost associated with this example. Clearly mark the optimal point. Include the quantity and cost on the isocost and isoquant.