You manage a small firm that produces Bluetooth speakers. Your firm's production function has been estimated to be q = 2.KL^1/2, where q represents its level of output and K and L represent the quantities of capital and labor inputs, respectively. The firm has a fixed level of capital of K = 1, where the daily rental rate of capital (r) is $100. The daily wage rate for a unit of labor (w) is $20. The market price for your product is $400. If your goal is to maximize the firm's profits, how many speakers will you choose to produce each day? What will your daily profits be?

Answer rating: 100% (QA)

It is given that Q 2KL 12 so Q 2L 12 when K 1 Profit Revenue Labour cost Capital C... View the full answer