Question: 1. Consider a firm that maximizes profit function maxK2L subject to the input constraint 2K2+L2=3 where K,L are capital and labor inputs, respectively. As the

1. Consider a firm that maximizes profit function maxK2L subject to

1. Consider a firm that maximizes profit function maxK2L subject to the input constraint 2K2+L2=3 where K,L are capital and labor inputs, respectively. As the manager of this firm, you would like the input constraint to be relaxed by 0.5 units. Using the envelope theorem, find the excess profits that could be garnered by the firm if the input constraint takes the form: 2K2+L2=3.5 The units of capital and labor are in millions of 's. Admit only positive values for the two inputs and the multiplier

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