Firm profit-maximizing choice of input and output

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A business with technology can be described by the production function y = 4z1^1/2 + 2z2^1/2 . Assume that input 2 is fixed in the short run: z2 = 9. Also assume that the firm faces output price p = 6 and input prices w1 = 2 and w2 = 6.

(a) Solve for the firm’s (short-run) profit-maximizing choice of input 1 (z1) and output (y).

(b) Sketch an appropriate graph illustrating this optimal production choice.

Reference no: EM131104395

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