The Director of Jonat Enterprise hires labour (L) and rents capital equipment (K) in a competitive market to produce chocolate pellets. At the moment, the wage rate of labour is GH¢2 per hour and capital is rented at GH¢5 per hour. Also, the unit price of chocolate pellets is GH¢0.75 and total cost of production is GH¢1,000. Suppose the firm’s production function (Q) follows a Cobb-Douglas specification given as: = 14K 0.5 0.5 + 10
Determine the optimal input usage and the maximum profit that Jonat Enterprise would obtain at the optimal input levels.
