Question: (Answer any TWO Questions) QUESTION 2 Snaq Creations is a perfectly competitive firm that operates in the Ghanaian market. The firm faces a production function

(Answer any TWO Questions) QUESTION 2 Snaq Creations is a perfectly competitive firm that operates in the Ghanaian market. The firm faces a production function of Q = 20KL' and sells its output at the price of GIIe 1.00 per unit. If the price of labour and capital are Gife 10.00 and GH+ 20.00 respectively and the operating budget for the firm is GH4 2,000.00. a) Determine the optimal levels of capital and labour usage 9 Marks b) Is the firm experiencing abnormal, normal or negative profit assuming it is operating in the short run production period? 4 Marks c) Based on your answer to (b) above, should the firm continue production or it should shut down and exit the market? & Marks d) What is the total profit at the optimal levels of capital and labour usage? 3 Marks 9 46

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