OrnekSorular - QUESTION 1 Ranger Construction is preparing...

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QUESTION 1: Ranger Construction is preparing to repair potholes, under contract to the local  county road repair agency. Based on past experience, Ranger has found that output  can be described by: Q = K .5 L .5 where Q = pot holes filled, K = units of capital, and L = units of labor.   Ranger can hire labor at $12 per unit, and the cost of capital is $8 per unit. Capacity  limitations require that Ranger accept no more than $96,000 worth of filling this  season.  i. What is the optimal mix of inputs for Ranger?  ii. How many potholes should Ranger agree to fill? Use the method of  Lagrange multipliers to solve. QUESTION 2: A firm produces according to the following production function: Q = K .25 L .75 where Q = units of output, K = units of capital, and L = units of labor. Suppose that  the price of K is $4 per unit, and the price of L is $6 per unit. What is the optimal  capital/labor ratio? QUESTION 3: Sleak Teak builds yard furniture, using domestic hardwoods and (in a smaller shop)  handcrafted knick-knacks from the same sorts of wood.  Although hardwoods were  readily available in the past, recently they have been much more difficult to obtain.
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This note was uploaded on 10/01/2011 for the course MGT 603 taught by Professor Jackshennan during the Spring '11 term at University of Michigan.

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OrnekSorular - QUESTION 1 Ranger Construction is preparing...

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