Question
Suppose the short-run production function for a firm producing books is given by: Q = 4L -0.4L + 2K where Q is the number
Suppose the short-run production function for a firm producing books is given by: Q = 4L -0.4L + 2K where Q is the number of books produced, L is the amount of labour used and K is the amount of capital used. The costs per unit of labour and capital are GHe 10 and GH7.5, respectively. If the unit price of a book is GH15 and 8 units of capital are employed, determine the optimal input usage and the maximum profit that the firm would obtain at the optimal input level. 4 marks
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Microeconomics
Authors: Robert Pindyck, Daniel Rubinfeld
8th edition
978-0132870436, 132870436, 013285712X, 978-0133371178, 133371174, 978-0132857123
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