Mr. Stonewall has to set up a firm that produces calculators competing with the likes of Casio and Sharp calculators. In order for to estimate the amount of labour and capital needed to maximise profit in the long run, Mr. Stonewall has employed you to help him in this regard. Currently, the competitive wage rate is set at ¢4 per unit of labour and capital is rented at ¢5 per unit. The forces of demand and supply in the industry has also set the equilibrium price of calculators at ¢0.8 per unit. Suppose the production function of Mr. Stonewall's firm is given = 20K0.5 LO.5 + 7.5 and the firm total cost of production is ¢1690. as Q Find the optimal levels of capital and labour needed to optimize output. The maximum profit of the firm at the optimal levels of labour and capital. 1.

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Chapter1: Making Economics Decisions
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Question 3
Mr. Stonewall has to set up a firm that produces calculators competing with the likes of Casio
and Sharp calculators. In order for to estimate the amount of labour and capital needed to
maximise profit in the long run, Mr. Stonewall has employed you to help him in this regard.
Currently, the competitive wage rate is set at ¢4 per unit of labour and capital is rented at ¢5
per unit. The forces of demand and supply in the industry has also set the equilibrium price of
calculators at ¢0.8 per unit. Suppose the production function of Mr. Stonewall's firm is given
as Q
20K0.5 LO.5 + 7.5 and the firm total cost of production is ¢1690.
Find the optimal levels of capital and labour needed to optimize output.
The maximum profit of the firm at the optimal levels of labour and capital.
11.
Transcribed Image Text:Question 3 Mr. Stonewall has to set up a firm that produces calculators competing with the likes of Casio and Sharp calculators. In order for to estimate the amount of labour and capital needed to maximise profit in the long run, Mr. Stonewall has employed you to help him in this regard. Currently, the competitive wage rate is set at ¢4 per unit of labour and capital is rented at ¢5 per unit. The forces of demand and supply in the industry has also set the equilibrium price of calculators at ¢0.8 per unit. Suppose the production function of Mr. Stonewall's firm is given as Q 20K0.5 LO.5 + 7.5 and the firm total cost of production is ¢1690. Find the optimal levels of capital and labour needed to optimize output. The maximum profit of the firm at the optimal levels of labour and capital. 11.
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