A firm buys two inputs, labor L and capital K, the total amount of which cannot exceed 100 units. The wage is $8, and the rental rate of capital is $10. The firm can, at most, spend $840 on the two inputs. This data can be summarized in the following equations: Input limit: K + L = 100 Budget limit: 8L + 10K = 840 What are the quantities of two inputs the firm must buy in order to produce a maximum output, given input and budget constraints? K =

A firm buys two inputs, labor L and capital K, the total amount of which cannot exceed 100 units. The wage is $8, and the rental rate of capital is $10. The firm can, at most, spend $840 on the two inputs. This data can be summarized in the following equations: Input limit: K + L = 100 Budget limit: 8L + 10K = 840 What are the quantities of two inputs the firm must buy in order to produce a maximum output, given input and budget constraints? K =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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I'm not sure how to start this problem, step by step instruction would be helpful, thank you!

A firm buys two inputs, labor L and capital K, the total amount of which cannot exceed 100 units. The wage is $8, and the rental rate of
capital is $10. The firm can, at most, spend $840 on the two inputs.
This data can be summarized in the following equations:
Input limit: K +L = 100
Budget limit: 8L + 10K = 840
What are the quantities of two inputs the firm must buy in order to produce a maximum output, given input and budget constraints?
K =

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