A company's production function is Q = L + 1.5K. Q represents the quantity of output produced. L measures the units of labour hired. K measures the units of capital hired. Wage rate per unit of labour is $20. Rental rate per unit of capital is $24.
What input bundle should the company owner choose to produce 200 units of output? What will be the associated minimum total cost of production? Show workings and explain answer.
Diagrammatically represent the business owner’s chosen input combination using an isoquant and an isocost line (keep labour L on the horizontal axis).