Question: 1. A firm buys inputs K and L at £70 a unit and £30 a unit respectively and faces the production function Q = 40K0.5L0.5. What is the cheapest way it can produce an output of 500 units?
2. A firm has a budget of £570 to spend on the three inputs x, y and z whose prices per unit are respectively £4, £6 and £3. What combination of x, y and z will maximize output given the production function Q = 2x0.2y0.3z0.45?