Answer to Question #79575 in Macroeconomics for Kwasi Ameyaw

Question

In Juiceland company Ltd, the relationship between output(Q) and number of hours of skilled labour (S) and unskilled labour(U) is :
Q=500S + 100U - 0.2S^2 - 0.3U^2
The hourly wage of skilled labour is $15, and the hourly wage of unskilled labour is $5. The firm can hire as much labour as it wants at these wage rates.
a) Juiceland COO recommends that the firm hire 400 hours of skilled labour and 100 hours of unskilled labour. Evaluate this recommendation.
b) If Juiceland decides to spend a total of $5000 on skilled and unskilled labour , how many hours of each type of labour should it hire?
c) If the price of a unit of output is $5 ( and does not vary with output), how many hours of unskilled labour should the company hire?