The manager of Don Teeta Company Limited hires labour (L) and rents capital equipment (K) in a very competitive market. Currently, the wage rate of labour is GH¢2 per hour and capital is rented at GH¢5 per hour, the unit price of the product is GH¢0.75 and total cost of production is GH¢1,000. Suppose the firm's production function (Q) is as folows: Q = 14K05L05+ 10 Determine the optimal input usage and the maximum profit.

Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter22: Supply: The Costs Of Doing Business
Section: Chapter Questions
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The manager of Don Teeta Company Limited hires labour (L) and rents capital equipment (K) in
a very competitive market. Currently, the wage rate of labour is GH¢2 per hour and capital is
rented at GH¢5 per hour, the unit price of the product is GH¢0.75 and total cost of production is
GH¢1,000. Suppose the firm's production function (Q) is as folows:
Q = 14K05L05+ 10
Determine the optimal input usage and the maximum profit.
Transcribed Image Text:The manager of Don Teeta Company Limited hires labour (L) and rents capital equipment (K) in a very competitive market. Currently, the wage rate of labour is GH¢2 per hour and capital is rented at GH¢5 per hour, the unit price of the product is GH¢0.75 and total cost of production is GH¢1,000. Suppose the firm's production function (Q) is as folows: Q = 14K05L05+ 10 Determine the optimal input usage and the maximum profit.
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