2. Theory of the firm A firm has a production function q= f(k,l) = (k0.25 +10.25)2, w is the wage, and v is the rental rate of capital. In the short run, k is fixed at 0. The firm also faces a competitive output price p. a. Find contingent labor demand le. b. Find the cost function CSR(q). c. Find the profit maximizing quantity 9sR-
2. Theory of the firm A firm has a production function q= f(k,l) = (k0.25 +10.25)2, w is the wage, and v is the rental rate of capital. In the short run, k is fixed at 0. The firm also faces a competitive output price p. a. Find contingent labor demand le. b. Find the cost function CSR(q). c. Find the profit maximizing quantity 9sR-
Chapter1: Making Economics Decisions
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Transcribed Image Text:2. Theory of the firm
A firm has a production function q = f(k,l) = (k0.25 +10.25)2, w is the wage, and v is the
rental rate of capital. In the short run, k is fixed at 0. The firm also faces a competitive
output price p.
a. Find contingent labor demand le.
b. Find the cost function CSR(q).
c. Find the profit maximizing quantity 9sR
Now we're back to the long run where k is variable. Also, for this part, assume w= v= 1.
d. Find contingent input demands land ke.
e. Find the cost function C(q).
f. Find the profit maximizing quantity.
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Please continue to solve from Part d to Part f. Thank you.
Transcribed Image Text:2. Theory of the firm
A firm has a production function q = f(k,l) = (k0.25 + 10.25)2, w is the wage, and v is the
rental rate of capital. In the short run, k is fixed at 0. The firm also faces a competitive
output price p.
a. Find contingent labor demand le.
b. Find the cost function CSR(q).
c. Find the profit maximizing quantity 9sR
Now we're back to the long run where k is variable. Also, for this part, assume w= v= 1.
d. Find contingent input demands land ke.
e. Find the cost function C(q).
f. Find the profit maximizing quantity.
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