Question: QUESTION TWO A company has the following production function: Q = 2(KL)0.5 Where L = Labour and K = Capital. The cost of labour per

QUESTION TWO

A company has the following production function: Q = 2(KL)0.5 Where L = Labour and K = Capital. The cost of labour per hour is K3 and the cost of capital is K42 per unit. The company has a budget of K588 available to spend on the two factors of production. a) Formulate the companys optimization problem b) Calculate the optimal input combination c) Compute the output level associated with the optimal input combination

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