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optimal level of production for the firm

A firms output level is 3,000 units. Their market price for its output is $1.00 per unit. Their production function is q=10*K^.5L^.5
K is fixed at 225 hours and L is 400 hours. the hourly wage rate is $6 and hourly rental rate for K is $8.
Should the firm shutdown?

Solution Preview

The cost of production is TC = K*r + w*L = 225*8 + 400*6 = 4200
Total Sales = 3000*1=3000
At current production level the firm is making losses.

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Solution Summary

This posting calculates what is the optimal level of production for the firm.