2) Assume a firm has the following production function 4 = K³L%¸ Assume w = 2, v = 16 and that K = 27 in the short run Further assume the fim faces a market price of 32. %3D a) What is the firm's level of production and labor that can maximize the profit in the short run? b) If you were their economic consultant, what would you advise them to do regarding short run production and future adjustments to K and L? Explain

2) Assume a firm has the following production function 4 = K³L%¸ Assume w = 2, v = 16 and that K = 27 in the short run Further assume the fim faces a market price of 32. %3D a) What is the firm's level of production and labor that can maximize the profit in the short run? b) If you were their economic consultant, what would you advise them to do regarding short run production and future adjustments to K and L? Explain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

BJO Ⓒ4 f(X₁, X₂) = (x₁² + X₂²) & 0
5. The annual output for a luxury hotel chain is given by Q = 30K²/5 L¹/2 R¹/4, where K, L and R are the capital, labor and real estate inputs, all measured in $1,000,000 s, and Q is the average number of rooms rented per day. The hotel chain's annual budget is B = $69 million. (a) How should they allocate this budget to the three inputs in order to maximize their annual output? What is the maximum output? (b) What is the approximate change in the firm's maximum output if their annual budget increases by $500,000? Explain your answer.
6
A firm engaged in the manufacture of RTWS faces the short-run production function Q = 250L - 5L², where L is the number of units of labor and Q is the number of RTWs produced annually. d.) How many RTWS can be produced by the firm in a year if there are 10 units of labor? e.) Compute the marginal product of the 40th unit of labor. f.) How many RTWs can be produced by the firm in a year if there are 40 units of labor? g.) Sketch the graph of the production function.
A firm's production function is given by 1/2 1/2 y = 10x1x2 where x₁ indicates the input labor and x₂ indicates the input capital. (a) Compute the partial derivatives of the production function. Provide an economic interpretation of each derivative. (b) When an amount of capital available is fixed by x2 = 9, compute the par- tial derivative with respect to ₁ and sketch its graph. Determine whether the derivative is monotone increasing or decreasing, and provide an inter- pretation.
1) Assume the production process can be represented by the following production function: Q=4K¹/²¹/2 We are operating in the short-run and thus K is fixed. We currently have use of 16 units of K. Note that the wage is $200 per worker, the rental rate of K is $150 per unit, and our output sells for $100 per unit. a) Write an expression for the MPL in the short-run:
6. Optimize the Cobb-Douglas production function given the following parameters. The maximum about of money available to spend is $1, 200 where the price of K L = 6. That is P = 12 and P = 6. The function is given as q 12 and the price of K0.4 L0.6 Using the Lagrangian method, what are the optimal values of Ko and Lo?
Assume that you have the following production function and input prices in the long run: 2 2 3 2 3 3 2 8 4 MPL K L MPK KL Y K L w r Continue to assume that the firm uses an input bundle of (8, 10). How much does this bundle cost? COST = __________
Given the following data on input and output levels. Suppose the output price is $5 and input price is $10. Find the values of AVP and MVP when X = 4: X 0 2 4 6 8 10 12 Y 0 100 250 450 600 700 750 $312.50 and $375 $20 and $375 $265.50 and $475 $20 and $750
Let us consider the cost implications of the short-run production schedule from assignment number 7, where capital was fixed at 2 units of capital. Labor: 0 1 2 3 4 5 6 7 8 9 Output: 0 6 24 60 120 170 210 240 260 270 In this scenario, since we only have two inputs (Capital and Labor), and since the amount of capital is fixed, the cost of total cost capital would also be Total Fixed Cost (TFC) and since labor is variable, the total cost of labor would be Total Variable Cost (TVC). In that context, assume that the cost of capital is $40 per unit per period, while the cost of labor (or wage rate) is also $30 per unit of labor per period. (a) Use this information set up a diagram (using excel) that shows total cost (TC) and total variable cost (TVC) of the firm per period in the short run with the level of output on the horizontal axi
1) For the following functions of production, find the functions of conditional input demand and the cost functions a. q = A min(az,, bz2}; b. q = Azf z; C. q = azı + bz2 d. q = az, + b(lnz2) a, b > 0 A, a, b > 0 A, a, b > 0 a, b > 0 2) For A and D of Point 1, verify Shepard's lemma. 3) For B demonstrate that is possible to retrieve the supply function based on what has been developed so far, in this case, atb<1 www.
3