) The Alberta Metal Co. produces brass fittings. AMC’s engineers estimate the

production function as , where q is annual output in pounds, L is

labor in person hours, and K is capital in machine hours. The marginal products of

labor and capital are and respectively.

AMC’s employees earn $15 an hour and the firm estimates a rental charge of $50 on

capital. In addition, AMC forecasts annual costs of $500,000 per year. (40 pts)

8

.

0

6

.

0

500 K

L

q ⋅

⋅

=

.

0

4

.

0

300 K

L

MPL ⋅

⋅

= − 8 2

.

0

6

.

0

400 −

⋅

⋅

= K

L

MPK

production function as , where q is annual output in pounds, L is

labor in person hours, and K is capital in machine hours. The marginal products of

labor and capital are and respectively.

AMC’s employees earn $15 an hour and the firm estimates a rental charge of $50 on

capital. In addition, AMC forecasts annual costs of $500,000 per year. (40 pts)

8

.

0

6

.

0

500 K

L

q ⋅

⋅

=

.

0

4

.

0

300 K

L

MPL ⋅

⋅

= − 8 2

.

0

6

.

0

400 −

⋅

⋅

= K

L

MPK

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