2. Suppose that a perfectly competitive firm uses two inputs to produce one output. Theconditional factor demand functions for this firm are as follows:x1(W1, W2, y) = (2w2/w;)/3y*/3x2(W1, W2, y) = (w1/2w2)²/3y4/3a) Find the cost function.b) Using the cost function, setup the firm's profit maximization problem and find thesupply function.c) Using the supply function, derive the factor demand functions.

We will use profit maximisation and substitution methods to answer this question.

2. Suppose that a perfectly competitive firm uses two inputs to produce one output. The conditional factor demand functions for this firm are as follows: x1(W1, W2, y) = (2w2/w;)/3y*/3 x2(w1, W2, y) = (w,/2w2)2/3y+/3 a) Find the cost function. b) Using the cost function, setup the firm's profit maximization problem and find the supply function. c) Using the supply function, derive the factor demand functions.

2. Suppose that a perfectly competitive firm uses two inputs to produce one output. The conditional factor demand functions for this firm are as follows: x1(W1, W2, y) = (2w2/w;)/3y*/3 x2(w1, W2, y) = (w,/2w2)2/3y+/3 a) Find the cost function. b) Using the cost function, setup the firm's profit maximization problem and find the supply function. c) Using the supply function, derive the factor demand functions.

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

Suppose a firm engaged in the illegal copying of DVD’s has a daily short run total cost function given by: STC = (q^2)+25 If pirated DVD’s sell for $20, how many will the firm copy each day? What will its profits be? What is the firm’s short run producer surplus at P=20? Develop a general expression for this firm’s producer surplus as a function of the price of pirated DVD’s.
Suppose that a firm is an imperfect competitor in the product market and a perfect competitor in the input markets and uses two variable inputs: Derive mathematically the first order condition showing how much of each input the firm should use to maximize total profits
1
The information below applies to a competitive firm that sells its output for $44.00 per unit. . When the firm produces and sells 100 units of output, its average total cost is $24.50. . When the firm produces and sells 101 units of output, its average total cost is $24.75. Suppose the firm is currently producing and selling 100 units of output. Should the firm increase its output to 101 units? Yes. This is because the marginal revenue exceeds the marginal cost. Yes. This is because the marginal revenue exceeds the average total cos No. This is because the marginal cost exceeds the marginal revenue. No. This is because the average total cost exceeds the marginal revenue.
Firm A and Firm B sell identical goods The total market demand is:Q(P) = 1,000-1.0P The inverse demand function is therefore: P(QM) = 10,000-10QM QM is total market production (i.e., combined production of firm’s A and B). That is: QM = QA + QB As a result, the inverse demand curve for each firm is: P(QA,QB) = 10,000-10QA-10QB The difference between this example and the example in class is that the two firms have different costs. Firm A has the same cost as in class, but firm B has a different cost function: TCA(QA) = 5000QA TCB(QB) = 5000QB Using the demand function and the cost functions above, what is firm A’s profit function? Using the profit function above and assuming that firm B produces QB, calculate what firm A’s best response is to firm B’s decision to produce QB. (Note: Firm A’s best response should be a function of QB) Using the demand function and the cost functions above, what is firm B’s profit function? Using the profit function above and assuming that firm A…
Only typed solution
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2 Where q is an individual firm’s quantity produced. The market demand curve for this product is Demand: Q = 120 – P Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market What is each firm’s fixed cost? What is its variable cost? At what quantity efficiency of scale would be achieved? Give the equation for each firm’s supply curve Give the equation for the market supply curve for the short run What is the equilibrium price and quantity for this market in the short run? In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit? In the long run with free entry and exit, what is the equilibrium price and quantity in this market? In the long-run equilibrium, how many firms are in the market? I want the subparts 4,5,6 to be solved. Thank you
Consider the perfectly competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost ( MCMC ), average total cost ( ATCATC ), and average variable cost ( AVCAVC ) curves shown on the following graph
Sketch a marginal cost curve for a firm that has constant marginal costs of production up to its capacity of 500 units but which cannot increase its output beyond that capacity PLEASEE SHOW THE CURVE
You are the owner of a firm in a perfectly competitive market. The market supply and demand are given by the equations: D: P=8 - 0.1Q S: P = 0.2 + 0.05Q Your firm's marginal cost curve and total cost curve are: MC = 0.1 + 0. 2q TC = 20.425 + 0. 1q +0.1q? What is the firm's profit (positive) or loss (negative) ? O 2.2 (profit) O 18.225 (profit) O -18.225 (loss) -2.2 (loss)
Typed Plzzzz And Asap
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 20 1.00 25 2.00 1.20 30 2.46 1.41 35 3.51 1.71 40 4.11 2.01 45 5.43 2.39 50 5.99 2.75 55 8.47 3.27 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? 2$ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? 2$