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q1) Given the production function: q= 0.1k^0.2l^0.8 and total budget = 10,000 where k is the number of hours of bar stool lathes used and l represents the number of worker hours employed during the period. Price of k equals price of l @50/hour.
Now, if a person wants to provide 10 bar stools and chooses inputs by equating their Marginal productivities, how much of each input will he hire and how much would the project cost?
q2) Given that production of crayons is conducted at two locations with the help of labor only. The production function at location 1 is given by q1=10.L1^0.5 and at location 2 by q2=50.L2^0.5.
i) If a single firm produces crayons at both locations then how should it allocate labor between them so it can get as large an output as possible? Explain precisely the relationship between LI and L2.
ii) Assuming that the firm operates in the efficient manner described in part (i) how does total output depend on the total amount of labor hired?
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