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A firm with a CD production function Q = 2K 0.5 L0.4 plans to produce 500 units of output per day. Assume the price of labor and capital are
w = $50 and r = $100 a day.
(a) What is the firm's optimal combination of factors that minimizes its cost?
(b) What is the market price of this good if this firm makes a $2,500 profit each day?
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