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Q. Let us assume that the government in a country has a mandate that the banks should give loans to companies generating more than 1000 jobs.
In this context, Bank A has received a loan request from a multinational company producing electronic gadgets, whose estimated production function is,
Q=5*L^0.6 K^0.8
where Q = annual output measured in pounds,
L = labor measured in labour hours,
K = capital measured in machine hours.
The employees earn $75 per hour. The firm estimates a rental rate of $50 per hour on capital. The firm has a budget of $500,000.
Determine the firm's optimal labor employment and check whether the bank should give the loan, as per the government's mandate.
Are required to explain the potential impact whether directly or indirectly to your organisation on economic - consumer price index ( inflation) -on Zalora
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