Let, production function, \(Q = 100K^{1/2}L^{1/2}\) , C =… – bitm Economics for Business 2024 Solved

bitm Economics for Business · 2024 · Solved Question with Answer

Let, production function, \(Q = 100K^{1/2}L^{1/2}\), C = Rs 2000, P = Rs 2, r = Rs 100 and w = Rs 80.

a. Compute the marginal productivity of two inputs.

b. Determine optimal employment of two variable inputs, profit, and maximum output.

c. What will be the effect on output and profit when the firm increases its investment to Rs 4,000?

Solution

Let, production function, \(Q = 100K^{1/2}L^{1/2}\) , C = Rs 2000, P = Rs 2, r = Rs 100 and w = Rs 80. a. Compute the marginal productivity of two…