What is the firm profit-maximizing quantity of output

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There is a firm with technology that can be described by the production function y = 4z1^1/2 + 2z2^1/2 with output price p = 6 and input prices w1 = 2 and w2 = 6. Now assume that the firm is making long-run decisions and can choose input 1 (z1) and input 2 (z2).

(a) Use the expressions w1 = pMP1 and w2 = pMP2 to solve for optimal z1 and z2.

(b) What is the firm’s profit-maximizing quantity of output y?

(d) Sketch the isoquant and isocost lines associated with this problem.

(e) What type of returns to scale are associated with this kind of production function?

Reference no: EM131104400

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