2. The output (Q) of a production process is a function of two inputs (L and K) and is given by the following relationship: Q=0.50LK -0.10L2 -0.05K² The per unit prices of inputs L and K are Rs 20 and Rs 25 respectively. The firm is interested in maximizing output subject to a cost constraint of Rs 500. Find out the optimal input mix and maximum level of output.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter16: Labor Markets
Section: Chapter Questions
Problem 16.7P
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2. The output (Q) of a production process is a function of two inputs (L and K) and is given by the
following relationship: Q=0.50LK -0.10L2 -0.05K²
The per unit prices of inputs L and K are Rs 20 and Rs 25 respectively. The firm is interested in
maximizing output subject to a cost constraint of Rs 500. Find out the optimal input mix and
maximum level of output.
Transcribed Image Text:2. The output (Q) of a production process is a function of two inputs (L and K) and is given by the following relationship: Q=0.50LK -0.10L2 -0.05K² The per unit prices of inputs L and K are Rs 20 and Rs 25 respectively. The firm is interested in maximizing output subject to a cost constraint of Rs 500. Find out the optimal input mix and maximum level of output.
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