Suppose the electronic manufacturer Foxconns production func

Suppose the electronic manufacturer Foxconn\'s production function of iPhone X is where x denotes the amount of iPhones as output, k and are the amounts of capital and labor as inputs. Let the factory price(the price that Apple offers to Foxconn) of iPhone X be given as P $700 r = $900 w $400 price of capital and price of labor

Solution

4) Production function:

X= f(k, l) = 2?kl

Px = $700, r= $900, w = $400

4) With k= 100,

X = 20?l

Profit

? = Px*x – w*l –r*k

? = 14000?l – 400l -90000

FOC:

d?/dl = 14000*(1/2)*l^-1/2 -400 =0

Solve for l

l = 306.25

Put l in x.

X = 20*17.5 = 350 units

Profit = 350*700 – (306.25*400 +900*100) = $32500