The production function for the personal computers of DISK, Inc., is given by
q = 10K^(0.5)L^(0.5)
where q is the number of computers produced per day, K is hours of machine time, and L is hours of labor input. DISK’s competitor, FLOPPY, Inc., is using the production function
q = 10K^(0.6)L^(0.4)
a. If both companies use the same amounts of capital and labor, which will generate more output?
b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In which company is the marginal product of labor greater? Explain.
c. Is there a maximum quantity that each firm can produce under fixed capital (from b)? If so, what is it?