Firm output given an annual production budget

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The production function for a certain firm is given by Q = 20K^(0.7)L^( 0.3)

where Q is the firm’s annual output, K is the firm’s capital input and L is the firm’s labor input. The price per unit of capital is pk = 10000 and the price per unit of labor is pl = 5000. Find the levels of capital and labor input that maximize the firm’s output given an annual production budget of B = 1, 000, 000, and find the maximal output.

Justify your claim that the output you found is the firm’s absolute maximum

Reference no: EM131389708

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