Suppose that you are the manager of Albany Miller, Inc., a manufacturer of high-tech blenders, and your production process is approximated as Q = 2K1/3 L2/3, where K is capital equipment and L is labor. Your company has already spent $9,500 on 8 units of capital equipment it owns and your workers are paid $150 per day. Assume that your manufactured blenders can be competitively sold for $281.25 each.
(a) What is your profit maximizing use of labor and capital? Clearly show your steps and calculations.
(b) What is your economic profit or loss? Clearly show your steps and calculations.
(c) Should your firm continue in business or shut down? Explain.