Suppose that a firm has a production function q = 2L05 + K, where L is...

 

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Suppose that a firm has a production function q = 2L05 + K, where L is the quantity of of the labor input, K is the quantity of the capital input, and q is the amount of output produced. Suppose that the firm has a budget of C = $300 to spend on costs, the price of labor is w = 5, and the price of capital is r = 10. Answer the following questions, and write your answers in the Answer Sheet. Write the firm's constraint (cost) as an equation, with two variables (L and K). Write the optimization (output maximization) problem. Find the first-order condition. Find the combination of inputs (L and K) that maximizes the producer's output at these prices. What is the optimal L? o What is the optimal K? Suppose that a firm has a production function q = 2L05 + K, where L is the quantity of of the labor input, K is the quantity of the capital input, and q is the amount of output produced. Suppose that the firm has a budget of C = $300 to spend on costs, the price of labor is w = 5, and the price of capital is r = 10. Answer the following questions, and write your answers in the Answer Sheet. Write the firm's constraint (cost) as an equation, with two variables (L and K). Write the optimization (output maximization) problem. Find the first-order condition. Find the combination of inputs (L and K) that maximizes the producer's output at these prices. What is the optimal L? o What is the optimal K?