Acme Container Corporation produces egg cartons that are sold to egg distributors. Acme has estimated this production function for its egg carton division: Q = 25L0.6K0.4, 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.If the marginal product of labor and capital are: MPL= 15 K^0.4/L^0.4 MPK= 10 L^0.6/K^0.6This is 15 times K to the power of 0.4 over L to the power of 0.4 for MPL.For MPk, it reads 10 times L to the power of 0.6 over K to the power of 0.6.A)Calculate the marginal rate of technical substitution, MRTS. (6 points) B)Determine the optimal capital-labor ratio that Acme should use in the egg carton division, given the values for w and r provided above. (6 points)C)If output is 2000 carton lots, how much capital and labor should this corporation employ? Graph K* and L* at the point of tangency between the isoquant and the isocost. (15 points)D)What is total cost at the levels of K* and L* you obtained in c.? (6 points)
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