1. A firm uses a single input to produce a commodity according to its short-run production function f(x) = 4\/x, where x is the number of units of input. The commodity sells for $100 per unit. The input cost $50 per unit. (a) the amount of input. (b) Write down a function that states the firm's profit as a function of What is the profit maximizing amount of input and output? (c) its input is subsidized by $10, explain in detail how this will affect the new input Suppose the firm is taxed $20 per unit of its output and the price of and output levels?
1. A firm uses a single input to produce a commodity according to its short-run production function f(x) = 4\/x, where x is the number of units of input. The commodity sells for $100 per unit. The input cost $50 per unit. (a) the amount of input. (b) Write down a function that states the firm's profit as a function of What is the profit maximizing amount of input and output? (c) its input is subsidized by $10, explain in detail how this will affect the new input Suppose the firm is taxed $20 per unit of its output and the price of and output levels?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A firm uses a single input to produce a commodity according to its
short-run production function f(x)= 4/T, where x is the number of units of input.
1.
The commodity sells for $100 per unit. The input cost $50 per unit.
(a)
Write down a function that states the firm's profit as a function of
the amount of input.
(b)
What is the profit maximizing amount of input and output?
(c)
Suppose the firm is taxed $20 per unit of its output and the price of
its input is subsidized by $10, explain in detail how this will affect the new input
and output levels?
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