Acme Container Corporation produces egg cartons that are sold to egg distributors. Acme has estimated this production function for its egg carton division:
Q = 25L^0.6K^0.4,
where Q = output measured in one thousand carton lots, L = labor measured in person hours, and K = capital measured in machine hours. Acme currently pays a wage of $10 per hour and considers the relevant rental price for capital to be $25 per hour. Determine the optimal capital-labor ratio that Acme should use in the egg carton division.

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The Answer of Acme Container Corporation produces egg cartons that are sold to egg distributors. Acme has estimated this production function for its egg carton division: Q = 25L^0.6K^0.4, where Q = output measured in one thousand carton lots, L = labor measured in person hours, and K = capital measured in machine hours. Acme currently pays a wage of $10 per hour and considers the relevant rental price for capital to be $25 per hour. Determine the optimal capital-labor ratio that Acme should use in the egg carton division.

Acme Container Corporation Produces Egg Cartons That Are Sold to Egg