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The Alex Corporation uses two inputs, A and B, to produce boats. The production function for boats is given byQ = A^0.5 x B^0.5, (or the square root of A multiplied times the square root of B)and the marginal products of A and B are given byMPa = 0.5Q/AMPb = 0.5Q/B
The prices of inputs are given by Pa = $10 and Pb = $10and the price of boats equals $30.
(a) If the Alex Co. has a total budget of $200 to spend on purchasing inputs, how many units of A and B should it hire?
(b)What will be its output, revenues, costs, and profits?
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