solution

In the Elwyn Company, the relationship between output (Q) and the number

of hours of skilled labor (S) and unskilled labor (U) is Q = 300S + 200U – 0.2S2 – 0.3U2

The hourly wage of skilled labor is $10, and the hourly wage of unskilled labor

is $5. The firm can hire as much labor as it wants at these wage rates.

a. Elwyn’s chief engineer recommends that the firm hire 400 hours

of skilled labor and 100 hours of unskilled labor. Evaluate this

recommendation. b. If the Elwyn Company decides to spend a total of $5,000 on skilled and

unskilled labor, how many hours of each type of labor should it hire?