You are a manager for Herman Millera major manufacturer of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is:

Q= 2(K)^1/2(L)^1/2

whereKrepresents capital equipment andLis labor. Your company has already spent a total of $8,000 on the 9 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. If workers at the firm are paid a competitive wage of $120 and chairs can be sold for $400 each, what is your profit-maximizing level of output and labor usage?

Output:

Labor:

What is your maximum profit?

$