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1. Let's analyze a producer whose production is described by the following production function: Q(K,L)=2KL+16L. The producer accepts costs that do not exceed 2000. He

1. Let's analyze a producer whose production is described by the following production function: Q(K,L)=2KL+16L. The producer accepts costs that do not exceed 2000. He pays 10 per 1 unit of labor and 20 per 1 unit of capital. There are no other costs apart from the costs of inputs. a) Find optimal combination of inputs. b) Find the output at optimum. c) Find APL at optimum. d) Find marginal rate of substitution (capital being replaced by labor) at optimum. (720)

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