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Given the production function ( Q = 20L - L^2 + 12K - 0.5K^2 ), ( P_K = 4000 ), ( P_L = 2000 ), ( C = 30000 ).

a. Find the efficient cost of two inputs.
b. Find the level of profit when the price of the product is 8000.

A. ( C = 10000, ) Profit = 7000
B. ( C = 15000, ) Profit = 5000
C. ( C = 20000, ) Profit = 3000
D. ( C = 25000, ) Profit = 1000

User Ben Hardy
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1 Answer

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Final answer:

The efficient cost and profit level calculation is an economic optimization problem involving a production function and constraints on costs and input prices. However, the provided information is inadequate to solve it conclusively.

Step-by-step explanation:

The question involves finding the efficient cost of inputs and level of profit for a given production function and cost constraints. This is a classic optimization problem in economics where a firm combines inputs in proportions that minimize costs and maximize profits. By applying the production function, input prices, and total cost constraint, the efficient cost of inputs can be uncovered, and the level of profit can be calculated, assuming a product price.

To find the efficient cost, we allocate the total cost C between labour L and capital K such that the marginal product per dollar is equalized across the two inputs. The amount of profit, when selling the product at price 8000, can be found by subtracting the total cost from the total revenue, which is the product price times the quantity produced (Q).

Unfortunately, the information provided appears to be insufficient or incomplete to directly answer the question. More data or clarification on how the inputs L and K relate to the total cost and how Q is determined would be necessary to provide specific efficient cost and profit levels.

User Hu
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