Question: Suppose that you have estimated the following output function where L is labor and K is capital: Y = 2K 3/4 L 1/8 You know

Suppose that you have estimated the following output function where L is labor and K is capital:

Y = 2K3/4L1/8

You know that the current price of labor is $13 and capital cost is $1 per machine (capital).

You currently use 81 units (machines) of capital.The price of the output is $60.

  1. Given a fixed level of capital (K=81), and a price of $60 per unit of output (output is represented by Y), how many employees (L) will you hire to maximize profit?This requires a calculation.

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