Question: 1. A firm faces the demand schedule p = 400 - 0.25q the marginal revenue schedule MR = 400 - 0.5q and the marginal cost schedule MC = 0.3q. What price will maximize profit?
2. A firm buys the three inputs K, L and R at prices per unit of £10, £5 and £3 respectively. The marginal product functions of these three inputs are
MPK = 150 - 4K
MPL = 72 - 2L
MPR = 34 - R
What input combination will maximize output if the firm's budget is fixed at £285?