MagnaBox installs automobile CD players. Its production function is Q(L,K) = K0.5L0.5 , where Q represents the
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MagnaBox installs automobile CD players. Its production function is Q(L,K) = K0.5L0.5 , where Q represents the number of CD players installed, L the number of labor hours, and K the number hours of leased installation equipment, which is fixed at 250 hours. The rental price of labor and capital are $10 and $50 per hour, respectively. MagnaBox has received an offer from Cheap Rides to install 1,500 CD players in its fleet of rental cars for
$15,000. If Magna Box maximizes profit, should it accept this offer?
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Related Book For
Managerial Economics: Tools For Analyzing Business Strategy
ISBN: 307174
1st Edition
Authors: Thomas J Webster
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