A firm's production function isQ = 5 + 25L - .5L2 + 30K – K2,|3Dand its demand function isPQ= MRQ = d = $30.The prices of L and K are PL = $6 and PK = $12.Use Excel Solver to find the profit-maximizingand cost minimizing amounts of L and K toemploy. The profit-maximizing and costminimizing amount of L is:А.L = 16.L= 25.C.L= 38.D.L= 42.B.

Answered: Image /qna-images/answer/f6ca1858-a394-42ad-83de-668f770fe277.jpg

Answered: В. L= 25.

Business

Economics

В. L= 25.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

A firm's production function is
Q = 5 + 25L - .5L2 + 30K – K2,
|3D
and its demand function is
PQ
= MRQ = d = $30.
The prices of L and K are PL = $6 and PK = $12.
Use Excel Solver to find the profit-maximizing
and cost minimizing amounts of L and K to
employ. The profit-maximizing and cost
minimizing amount of L is:
А.
L = 16.
L= 25.
C.
L= 38.
D.
L= 42.
B.

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