The production function for Baroda Foods Ltd. is
Q = 20K 0.5 L 0.5
The initial prices of the input are W = 20 and r = 30.
Under the labor contract with a national union, at least the current employment level of 300 workers must be maintained through the next production period. ( However, more workers can be hired if necessary).
( a) in the previous production period, the firm produced 4,899 units of output. Assuming efficient production, what was the rate of capital input ?
( b) Because of the national recession, the desired level of output for the next production period is only 4,000 units. what is the optimal rate of capital input ?