1. Suppose you own a lemonade stand and sell delicious lemonade in your neighborhood. Ittakes 3 lemons, L2 0, to make a glass of lemonade, Q2 0. Each lemon costs c> 0 and you sell your lemonade for pi > 0. Furthermore, assume that you must pay your neighbor Karen a bribe of F > 0, as you do not have a license to operate the lemonade stand and she will call the police otherwise. a. What is the production function of the lemonade stand? b. What is the profit function of the lemonade stand? c. What is profit maximizing amount of lemonade to sell?

1. Suppose you own a lemonade stand and sell delicious lemonade in your neighborhood. Ittakes 3 lemons, L2 0, to make a glass of lemonade, Q2 0. Each lemon costs c> 0 and you sell your lemonade for pi > 0. Furthermore, assume that you must pay your neighbor Karen a bribe of F > 0, as you do not have a license to operate the lemonade stand and she will call the police otherwise. a. What is the production function of the lemonade stand? b. What is the profit function of the lemonade stand? c. What is profit maximizing amount of lemonade to sell?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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