Question: 1. If a firm has a budget of £378 what combination of K and L will maximize output given the production function Q = 40K0.6L0.3 and prices for K and L of £20 per unit and £6 per unit respectively?
2. A firm faces the production function Q = 6K0.4L0.5. If it can buy input K at £32 a unit and input L at £8 a unit, what combination of L and K should it use to maximize production if it is constrained by a fixed budget of £36,000?