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Consider a firm that produces fertilizer using two variable inputs in the short run: energy (E) and labor (L). Its two-factor production function is: q(E,L)=30E5E2
Consider a firm that produces fertilizer using two variable inputs in the short run: energy (E) and labor (L). Its two-factor production function is: q(E,L)=30E5E2 15L5L2 5EL The firm operates in a perfectly competitive market with a fertilizer price of pq = 1. The price of energy is pE = 5 and the wage rate (i.e., the price of labor) is w = 5. (a) Whatisthefirm'sprofit-maximizingchoiceofinputs(E,L) (b) What is the profit maximizing level of output q = q(E, L)
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