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A price-taking, profit-maximizing, competitive firm produces output this way: Y = 100K 0.5 The company rents capital at rate r to produce output Y. The

A price-taking, profit-maximizing, competitive firm produces output this way:

Y = 100K^0.5

The company rents capital at rate r to produce output Y. The company only has that one cost, the rental rate of capital, so total costs are rK. The rental cost of capital, r, is 0.2.

If the company wants to maximize its profits, how much capital (K) should it rent?

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