Robbins Wine is a company

Robbins Wine is a company that manufactures corks for wine bottles using capital (K) and labour (L). The total output is given by the production function

Q = F(K,L) = (5+ b) KL,

Q and K are measured in units and L in hours.
b = 6, wage rate (w) is 20 and capital rate (r) is 40.


1. Determine whether the production function is decreasing, constant or increasing returns to scale. Explain.


2. Write equation for marginal and average product of capital. Find the firm’s MRTS.


3. What is the cost minimizing input mix if firm wishes to produce 160 units of output?

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