You are a manager of a major manufacturer of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is                                                   Q = 2(K) 1/2 (L)1/2   where K represents capital equipment and L is labor. Your company has already spent a total of P8,000 on the 9 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. If workers at the firm are paid a competitive wage of P120 per day and chairs can be sold for P400 each, what is your profit-maximizing level of output and labor usage? What is your maximum profit

ENGR.ECONOMIC ANALYSIS
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You are a manager of a major manufacturer of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is

 

                                                Q = 2(K) 1/2 (L)1/2

 

where K represents capital equipment and L is labor. Your company has already spent a total of P8,000 on the 9 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. If workers at the firm are paid a competitive wage of P120 per day and chairs can be sold for P400 each, what is your profit-maximizing level of output and

labor usage? What is your maximum profit?

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