Question

Q=5L เ K ? A. What is the marginal rate of technical substitution of L for K for this production function? B. What is the tangency condition for a producer's cost minimization problem (CMP)?

Answer 1

A. The Marginal rate of technical substitution is 1.58.

B. As per the tangency condition, on the one hand, all available money will be involved, while on the other hand, a commodity bundle will be chosen on the basis of such that the MRS between any two items will be present.

The marginal tax rate is the amount of extra tax paid for every new dollar of income produced.

The average tax rate is calculated by dividing the total tax paid by the total income received. A marginal tax rate of 10% indicates that 10 cents of every additional dollar earned is taxed.

Here,

Marginal rate of technical substitution = 5 x
`2^(2/3)` ÷
`1^(1/2)`

= 1.58÷1

= 1.58

Therefore, the marginal rate is 1.58. and according to the condition MRS between two goods.

This is an incomplete question the complete question is:

A firm has a production function has a

`Q = 5L^2/3 * K^1/3`

A. What is the marginal rate of technical substitution of L for K for this production function?

B. What is the tangency condition for a producer's cost minimization problem (CMP)?