You are a manager for Herman Millera major manufacturer of office furniture. You recently hired an economist to work with engineering and operations experts to estimate the production function for a particular line of office chairs. The report from these experts indicates that the relevant production function is:Q = 2(K)1/2(L)1/2where K represents capital equipment and L is labor. Your company has already spent a total of $8,000 on the 9 units of capital equipment it owns. Due to current economic conditions, the company does not have the flexibility needed to acquire additional equipment. If workers at the firm are paid a competitive wage of $120 and chairs can be sold for $400 each, what is your profit-maximizing level of output and labor usage?

$4000  is the correct answer to the given question .

Explanation:

The marginal cost with compare to the labor can be written as

Here K=9 units  putting this value in the previous equation  we get

We can find the value of labor by the given formula that are given below

From the given question that are mention in question

Q = 2(K)1/2(L)1/2

Putting the value of K and L in the given equation we get

So profit maximizing output is =$60 chairs as the chairs can be sold for  the $400 each so = $60 * $400 *10=$24000 chairs

As the competitive wage of $120 for 100 units as well as the total of $8,000 on the 9 units of capital equipment

=$20000

Therefore profit-maximizing level of output =$24000-$20000=$4000

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3,500 beverages

explanation: