Demonstrate that the optimal quantities of labor and capital
Let Q= Lα Kβ. Assume the firm seeks to form a given output while minimizing its total input cost. TC=Pι L + P κK. Demonstrate that the optimal quantities of labor and capital satisfy L/K=(α/β) (Pκ/Pι). Give an intuitive explanation for this result.
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Let Q= Lα Kβ. Assume the firm seeks to form a given output while minimizing its total input cost. TC=Pι L + P κK. Demonstrate that the optimal quantities of labor and capital satisfy L/K=(α/β) (Pκ/P&i
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