The manager of Don Teeta Company Limited hires labour (L) and rents capital equipment (K) in a very competitive market. Currently, the wage rate of labour is GH¢2 per hour and capital is rented at GH¢5 per hour, the unit price of the product is GH¢0.75 and total cost of production is GH¢1,000. Suppose the firm’s production function (Q) is as follows: Q = 14K0.5L0.5 + 10 Determine the optimal input usage and the maximum profit

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A: Answer to the question is as follows:

Q: production function

A: The firm produces at MRTS=w/r   MRTS=MPL/MPK =100K/100L =K/L

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A:

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Q: The feature that distinguishes short-run from the long-run is the*

A:

Q: The manager of Don Teeta Company Limited hires labour (L) and rents capital equipment (K) in a very…

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Q: Consider the Cobb-Douglas production function: 1. Derive the conditional input demands. 2. Derive…

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