question archive Assume that a firm’s production of a certain product can be expressed as a function of two input variables, which are capital (K) and labor (L)
Assume that a firm’s production of a certain product can be expressed as a function of two input variables, which are capital (K) and labor (L)
Subject:EconomicsPrice: Bought3
Assume that a firm’s production of a certain product can be expressed as a function of two input variables, which are capital (K) and labor (L). The amount of output (Q) of this product is given by
Q = 4K1/3L1/2,
Also assume that the total cost of production (C) is given by the function
C = 0.1K + 2L,
and the price (P) of the product is in dollars per unit.
(1) Find the quantities of capital and labor that the firm must utilise, in order to maximise its profit.
(2) Find the quantity of the produced product, at which the firm's profit is maximised, and also find the maximum profit.
