Question

Let the production function of a firm be `Q=5L^(1/2)K^(1/2)`.

Find out the maximum possible output that the firm can produce with 100 units of L and 100 units of K.

Answer 1

`Q=5L^(1/2)K^(1/2)................(1)`

L = 100 units of labour

K = 100 units of capital

Putting these values in equation (1)

`Q = 5(100)^(1/2)(100)^(1/2)`

= 5(10)(10)

= 500 units

Thus, the maximum possible output that he firm can produce is 500 units.