A firm’s production function is given by Q=K2L. The marginal products of labor and capital are, respectively, MPL=K2 and MPK=2KL. Further, the wage rate is w=$10 and the rental rate of capital is r=$20. What is the most efficient combination of labor and capital (L,K) that also results in a total cost level of exactly $1,200?
a) (40, 40)
b) (30, 45)
c) (50, 50)
d) (25, 47.5)
