Suppose that a firm’s production function isq=10L 0.5 K 0. This means that the marginal rate of technical substitution is K/L.

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Suppose that a firm’s production function isq=10L0.5K0.5. This means that the marginal rate of technical substitution is K/L.The cost of a unit of labour is $20 and the cost of a unit of capital is $80. The firm wants to produce 130 units of output. If capital is fixed in the short run at 5, then the firm should hire how many units of labour?

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