Question

A manager hires labour and rents capital equipment in a very competitive market. Currently
the wage rate is GH¢2 per hour and capital is rented at GH¢5 per hour, the unit price of the
product is GH¢0.25 and total cost is 1000. Suppose the firm’s production function is as
follows:
� = 14�*.,�*., + 10
i. What is the amount of labour and capital the firm should employ in order to maximize
output? [Hint: Maximise the product function subject to the cost constraint]
ii. What is the maximum profit?

Answer 1

Answer:

12+46*46/79= 5‹9* 6"9(5 sohc

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Step-by-step explanation:

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