Question 5 A manager hires labour and rents capital equipment in a very competitive market. Currently the wage rate is GH¢2 per hour and capital is rented at GH¢18 per hour, the unit price of the product is GH¢0.75 and total cost is 576. Suppose the firm’s production function is as ).(+ ).,+ follows: ? = 20? ? + 15 a) what is the amount of labour and capital the firm should employ to maximize output? b) What is the maximum profit?
Question 5 A manager hires labour and rents capital equipment in a very competitive market. Currently the wage rate is GH¢2 per hour and capital is rented at GH¢18 per hour, the unit price of the product is GH¢0.75 and total cost is 576. Suppose the firm’s production function is as ).(+ ).,+ follows: ? = 20? ? + 15 a) what is the amount of labour and capital the firm should employ to maximize output? b) What is the maximum profit?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 9E
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Question 5
A manager hires labour and rents capital equipment in a very competitive market. Currently
the wage rate is GH¢2 per hour and capital is rented at GH¢18 per hour, the unit price of the
product is GH¢0.75 and total cost is 576. Suppose the firm’s production function is as
).(+ ).,+ follows: ? = 20? ? + 15
a) what is the amount of labour and capital the firm should employ to maximize output?
b) What is the maximum profit?
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