You are a manager at glass inc.—a mirror and window supplier

 

1. You are a manager at Glass Inc.—a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized in the table below and are based on the 8 units of capital currently available at your plant. Workers are paid $60 per unit, per unit capital costs are $20, and your encapsulated windows sell for $12 each. Given this information, what is your optimal labor and output decision?

Labor: [removed]
Output: [removed]

Given these decisions, what will be your profit?

$[removed]

2. A firm produces output according to the production function:

Q = F(K,L) = 4K + 8L.

a. How much output is produced when K = 2 and L = 3?

[removed]

b. If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost-minimizing input mix for producing 32 units of output?

Capital: [removed]
Labor: [removed]

c. If the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour, what is the cost-minimizing input mix for producing 32 units of output?

Capital: [removed]
Labor: [removed]

 

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