2) Suppose that you have estimated the following output function where L is labor and K is capital:

Y = 2K^3/4L^1/4

You know that the current price of labor is $13 and capital cost is $1 per per machine (capital).

You currently use 64 units (machines) of capital.The price of the output is $60

As we compete both internationally and within markets, the challenge of wages and technology makes a balancing act relative to the capital/labor ratio. In addition, rising interest rates increase the cost of capital, both explicit and implicit..FINALLYPLEASE USE A ROUND NUMBER FOR EMPLOYEES (IT MAKES IT SOMEWHAT CLEARER)

using calculus or an excel spreadsheetboth work. If you use calculus, show your work; if you use a spreadsheet, please submit the spreadsheet. Note that number of employees may include fractions (part time workers and product in millions)

1. Given a fixed level of capital (K=), and a price of $60 per unit of output (output is represented by Y), how many employees (L) will you hire to maximize profit?This requires a calculation.

1. Given a fixed level of capital (K=81), and a price of $60 per unit of output, what is the level of output you will produce? This requires a calculation.

1. Calculate the profit given the optimal number of employee given the answer in #2a.

1. At What number of employees would you maximize output but not lose money? This requires a calculation. use 81

1. If the Wage Rate fell to $12.50, what would be the possible outcomes to L, P, and Profit? This requires a calculation