Suppose a Cobb-Douglas Production function is given by the following: P(L, K) = 80L0.9K0.1
where L is units of labor, K is units of capital, and P(L, K) is total units that can be produced with this
labor/capital combination. Suppose each unit of labor costs $900 and each unit of capital costs $8,100.
Further suppose a total of $4,860,000 is available to be invested in labor and capital (combined).
A) How many units of labor and capital should be "purchased" to maximize production subject to your
budgetary constraint?
Units of labor, L
Units of capital, K =
B) What is the maximum number of units of production under the given budgetary conditions? (Round your
answer to the nearest whole unit.)
Max production =
units