The manager of Don Teeta Company Limited hires labour (L) and rents capital equipment (K) in a very competitive market. Currently, the wage rate of labour is GH¢2 per hour and capital is rented at GH¢5 per hour, the unit price of the product is GH¢0.75 and total cost of production is GH¢1,000. Suppose the firm’s production function (Q) is as follows: ? = 14?0.5?0.5 + 10 Determine the optimal input usage and the maximum profit.

Micro Economics For Today
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ISBN:9781337613064
Author:Tucker, Irvin B.
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ChapterP2: Microeconomics Fundamentals
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The manager of Don Teeta Company Limited hires labour (L) and rents capital equipment (K) in
a very competitive market. Currently, the wage rate of labour is GH¢2 per hour and capital is
rented at GH¢5 per hour, the unit price of the product is GH¢0.75 and total cost of production is
GH¢1,000. Suppose the firm’s production function (Q) is as follows:
? = 14?0.5?0.5 + 10
Determine the optimal input usage and the maximum profit.

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