Suppose a firm uses skilled and unskilled workers to produce. The firm’s production function is Q = H ln(L) where Q is the output quantity; H is the number of skilled workers; and L is the number of unskilled workers. Let the wage rates of skilled and unskilled workers be wH = 2 and wL = 1 respectively. The output price is p = 1 per unit. The firm operates in competitive input and output markets. What is the profit maximizing combination of H and L? (a) H=0,L=1 (b) H=0,L=2 (c) H=L=e2 (d) H =L=ln(2) (e)H=L= √2 (f) H = 2, L = 1 (g) H=1,L=2 (h) H=4,L=2
Suppose an individual has a utility function U = C+3L, where C is the consumption level and L is the leisure hours. Suppose the individual has 100 hours in total for work and leisure and $10 non-labor income. The wage rate is $3.14. Which feasible consumption level maximizes the individual’s utility?
(a) 0 (b) 1.8 (c) 9.42 (d) 10 (e) 31.4 (f) 96.86 (g) 100 (h) 131.4 (i) 314 (j) 324 (k) 414