Microeconomics HW 7

1. 11.1‐11.7, 11.9‐11.10

2. Suppose that the w=1, r=4 and the production function is given by: Q = K1/3L2/3. This means that the marginal product of labor and marginal product of capital are given by: MPL=(2/3)(K/L)1/3 and MPK=(1/3)(L/K)2/3. If the firm wants to produce 32 units of output in the long run, how much L and how much K should they use?

3. Suppose labor and capital are perfect substitutes in production. Suppose further that the wage rate is 1 and the rental rate is 2. Illustrate with isoquants and isocosts how much capital and labor you would use to produce 4 units of y.