Assuming the production function: Q = 2.5L^0.4 K^0.6 , a wage rate of $24 and a rental rate of $18.
a. What is the least costly combination of L and K needed to produce 1000 units?
b. What is the cost of the bundle found in sub-question a?
c. What is the least costly combination need to produce 2000 units?
d. Please illustrate the relationship of L, K, Q in a carefully labelled diagram. (Please use the information from sub-questions a and c)
e. How would your answer to sub-question a change if the rental rate increased to $24?
