The production function for a firm is given as Q = 25L0-7K04. The price of labour and capital are RM60 and RM25 respectively. a. The firm is currently employing 5 units of capital and 20 units of labour. Is the current capital-labour combination efficient? Prove your answer. b. State the expansion path for this firm. c. If the firm wants to produce 500 units of output, what is the capital-labour combination that best suits this production level? d. Thus, how much is the total cost incurred? e. If the price of output is $50/unit, calculate the total maximum profit that it can get.

Q&A Education