Question

The company uses in the production of commodity X two independent resource A and B (labor and capital). measure of marginal products of resources are shown in the table below. goods are sold at a price of 50 thousand dollars.

Qa MPa Qb MPb
1 12 1 20
2 11 2 18
3 10 3 16
4 9 4 14
5 8 5 12
6 6 6 10
7 5 7 8
8 3 8 6


Determine the following: At what proportion of resources firm maximizes profit if PA= $250 and PB= $400., and what is the size of the profits.