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In: Economics

The production technology of a manufacturer is estimated to be Q = 150N - .025N2, where...

The production technology of a manufacturer is estimated to be Q = 150N - .025N2, where Q is output and N is labor input. The manufacturer has no constraint in hiring labor.

a. What will be the optimum N and Q under the given assumption.

The tight job market and the skill requirement of the industry that the manufacturer is operating has limited the hiring of the labor to no more than 250.

b. Formulate the optimizing problem of the manufacturer under the new job market condition.

c. Find the optimum N and Q under new condition.

d. What does Lagrangian multiplier imply in this problem?

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Expert Solution

Rahul Sunny answered 1 year ago
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