Competition

Question 2
Suppose that a firm has access to two alternative production functions:
(i) Q ? 10K0.5L0.5 (where
L
MP K L ? 5 and
K
MP L K ? 5 )
(ii) Q ? 2K ? L (where MPL ? 1 andMPK ? 2 )
The firm aims to produce an output of 1000 units and the wage rate is $10 while the rental on capital
is $15. Which production function will the firm choose? Explain your answer and show your working.