Question

Suppose the production of solar powered lawn mowers is characterized by the production function Q = LE, where Q represents the number of ornaments produced. Suppose that the price of labor is $10 per unit and the price of energy is $1 per unit. Find the cost-minimizing combination of labor and energy for a manufacturer that wants to produce 121,000 lawn mowers.

Answer 1

110 labor and 1100 energy

Cost of 2,200 dollars

Step-by-step explanation:

Q = L x E

Cost = 10 L + E

We use Excel solver tool to get this

A B C

1 Labor Energy

2 Quantity 110 1100

3 Cost 10 1

4 output 121,000 (B2 * C2)

5 cost 2,200 (B2*B3 + C2*C3)

we want to minimize B5 (cost)

changing the quantities (b2:c2)

with the constrain that output b4= 121,000