Question

Suppose Q gives the production function Q=150KL and the price of labor and capital is 2.5 and 6 birr respectively. If the total outlays of the firm is 3000 Birr. Determine the level of employment of both inputs that maximizes output.

Answer 1

$Solution$

$Q=150KL\\ Labor=2.5\\ Capital =6\\ Outlay=3000\\ Maximizes \ output. \\ Q=150\times6\times2.5\\ Q=2250.$