Chapter 8
Page 41
A mop company can produce
mops using x units of capital and y units of labor,
with production costs
dollars. With a budget of $400,000, the maximum
production is 65,000, using $300,000 in capital and $100,000 in labor. The Lagrange
multiplier is
Number of budget dollars per mop
Number of mops per budget dollar
Number of units of capital per mop
Number of units of labor per budget dollar
A mop company can produce
mops using x units of capital and y units of labor,
with production costs
dollars. With a budget of $500,000, the maximum
production is 65,000, using $350,000 in capital and $150,000 in labor. The Lagrange
multiplier is
. What is the practical meaning of the statement
If the number of units of labor is increased by 1, we expect the number of mops to
increase by about 0.3.
If the number of units of capital is increased by 1, we expect the budget to
increase by about $0.3.
If the budget is increased by $1, we expect the number of mops to increase by
about 0.3.
If the number of mops is increased by 1, we expect the budget to increase by
about $0.3.
Ans: C Learning Objectives: Interpret lambda, the Lagrange multiplier value.
difficulty: hard section: 8.6
The quantity, Q, of a good produced depends on the number of workers, W, and the
amount of capital invested, K, according to the Cobb-Douglas function
.
In addition, we know that labor costs are $19 per employee, capital costs are $8 per unit,
and the budget is $2500. The maximum production level is about _____ units, where
W = _____ and K = _____. Round to the nearest whole number.
Learning Objectives: Set up and solve constrained optimization problems using
Lagrange multipliers. difficulty: medium section: 8.6
Ans: B Learning Objectives: Interpret lambda, the Lagrange multiplier value.
difficulty: medium section: 8.6