What is the maximum profit firm can make


Problem

1. A firm selling in a perfectly competitive market where the ruling price is £40 can buy inputs K and L at prices per unit of £20 and £6 respectively. If it operates with the production function Q = 21K0.4L0.2, what is the maximum profit it can make?

2. A firm faces the production function Q = 2.4K0.6L0.2, where K costs £25 per unit and L costs £9 per unit, and sells Q at a fixed price of £82 per unit. Explain why it cannot make a profit of more than £20,000, no matter how efficiently it plans its input mix.

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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Microeconomics: What is the maximum profit firm can make
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