You are a manager of a major manufacturer of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is Q = 2(K) 1/2 (L)1/2 where K represents capital equipment and L is labor. Your company has already spent a total of P8,000 on the 9 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. If workers at the firm are paid a competitive wage of P120 per day and chairs can be sold for P400 each, what is your profit-maximizing level of output and labor usage? What is your maximum profit

You are a manager of a major manufacturer of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is Q = 2(K) 1/2 (L)1/2 where K represents capital equipment and L is labor. Your company has already spent a total of P8,000 on the 9 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. If workers at the firm are paid a competitive wage of P120 per day and chairs can be sold for P400 each, what is your profit-maximizing level of output and labor usage? What is your maximum profit

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.7P

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You are a manager for Herman Miller, a major manufacturer of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is Q = 2(K)1/2(L)1/2 where K represents capital equipment and L is labor. Your company has already spent a total of $8,000 on the 9 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. If workers at the firm are paid a competitive wage of $120 per day and chairs can be sold for $400 each, what is your profit-maximizing level of output and labor usage? What is your maximum profit?
Assume that you are a manager for Haworth —one of the major manufacturers of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is Q = 2(K) 1/2 (L)1/2 where K represents capital equipment and L is labor. Hanworth has already spent a total of $10,000 on the 4 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. The workers at the firm are paid a competitive wage of $100. Also, the chairs can be sold for $200 each. Given the competitive wage of workers which is $100 and the price of chairs, what is your profit-maximizing level of output and labor usage? what is your maximum profit?
Assume that you are a manager for Haworth —one of the major manufacturers of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is Q = 2(K) 1/2 (L)1/2 where K represents capital equipment and L is labor. Hanworth has already spent a total of $10,000 on the 4 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. The workers at the firm are paid a competitive wage of $100. Also, the chairs can be sold for $200 each. Suppose that Hanworth aims to produce 200 units of chair, how much is the optimal level of capital(K) needed in the production to maximize your profit?
Assume that you are a manager for Haworth —one of the major manufacturers of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is Q = 2(K)^1/2(L)^1/2 where K represents capital equipment and L is labor. Hanworth has already spent a total of $10,000 on the 4 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. The workers at the firm are paid a competitive wage of $100. Also, the chairs can be sold for $200 each. Suppose that Hanworth aims to produce 200 units of chair, how much is the optimal level of workers(L) needed in the production to maximize your profit? Suppose that Hanworth aims to produce 200 units of chair, how much is the optimal level of capital(K) needed in the production to…
You are a manager for Herman Miller—a major manufacturer of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is:Q = 2(K)1/2(L)1/2where K represents capital equipment and L is labor. Your company has already spent a total of $8,000 on the 9 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. If workers at the firm are paid a competitive wage of $120 and chairs can be sold for $400 each, what is your profit-maximizing level of output and labor usage?Output: Labor: What is your maximum profit?$
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The Cobb-Douglas production function for a particular product is N(x,y) = 60x0.7 0.3, where x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $40 and each unit of capital costs $120. Answer the questions (A) and (B) below. (A) If $800,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. Production will be maximized when using units of labor and units of capital.
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The Cobb-Douglas production function for a particular product is N(x,y) = 40x0.6.0.4, where x is the number of units of labor and y is the number of units of capital required to produce N(x, y) units of the product. Each unit of labor costs $40 and each unit of capital costs $120. Answer the questions (A) and (B) below. (A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. (B) Find the marginal productivity of money in this case, and estimate the increase in production if an additional $50,000 is budgeted for the production of the product. (A) If $300,000 is budgeted for production of the product, determine how that amount should be allocated to maximize production, and find the maximum production. Production will be maximized when using units of labor and units of capital.