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A profit maximizing firm has a production function such that:
Y=K2L2
a) If P=10,rk=2,andWL=3 , what would be its optimum be? How can you show that it is a maximum?
b) How would the answer change if it needs to produce at least 100 units of Y and that it now is a cost minimizing firm?
Determination of L in the cross model As firms will produce less than Y OPT , they require less labor than L OPT . We can determine exactly how much L they need in order to pro
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