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You manage a two-product firm. The production technology requires a mixture of capital and labor to produce each product. Capital is shared, while labor is
You manage a two-product firm. The production technology requires a mixture of capital and labor to produce each product. Capital is shared, while labor is specific to each of the two products. For the first product, capital ( K 0 ) and labor ( L 1 0 ) must satisfy the following, in order to produce q 1 units: q 1 K L 1 . Likewise, producing q 2 units of the second product requires capital ( K ) and labor (now L 2 0 ) such that: q 2 K L 2 . In addition, total capital is limited to a maximum of 200 units. (So K 200 .) Naturally, K , L 1 , L 2 are all required to be non-negative. Capital costs 100 per unit, labor for the first product costs 140 per unit and labor for the second product costs 175 per unit. The first product sells for 275 per unit, and the second sells for 300 per unit
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