25. A firm produces the output y using two inputs x₁ and x2 in non-negative quantities through theproduction relationship:y = g(x1,x2)=xx₁₂The firm obtains a price of py > 0 per unit of y that it sells. It has available an inventory of K₁ units ofthe input x₁ and K2 units of the input x2. More units of x₁ and x2 may be purchased from the marketat the unit prices of p1 > 0 and p2 > 0, respectively. Alternatively, the firm can also sell any unusedamount of its inputs to the market at these prices.6(a) Describe the firm's profit-maximization problem, and derive the equations that define the criti-cal points of the Lagrangean L.(b) Assuming py = P₁ = P2 = 1, K₁ = 4, and K₂ = 0, solve for the firm's optimal level of output y.(c) Assume again that py = p₁ = p2 = 1, but suppose now that the values of K₁ and K₂ areinterchanged, i.e., we have K₁ = 0 and K₂ = 4. Is the firm's new optimal output level differentfrom the old level? Why or why not?

(a) Describe the firm's profit-maximization problem and derive the equations that define the…

Answered: 25. A firm produces the output y using…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a competitive market for red lentils with 100 identical farmers in Horsham Victoria, a competitive market price of $5 and the following MC for each farmer: MC = $0.05Q Also consider the following market demand function: QD a) Calculate the optimal level of production (in tonnes) for each farmer (show workings) = = 1000 - 40P b) Assuming 100 lentil farmers of equal size how many tonnes of lentils in total will be supplied in the entire market? (show all workings) c) Consider that the government now imposes a 25% tax on producers, calculate i) the new equilibrium level of output for each firm (hint - think about how this affects each farmer's marginal cost), and ii) new total supply in the entire market (show all workings)
8. A commodity has price demand function p(x)= 11800 - .01x and each unit costs 1000 and the overhead is 5000. a) what is the revenue function, cost function and profit function ? b) what price should be charged to maximize profits? c) what is the marginal profit for x=400 ? Explain what this marginal profit number means.
The supply function for a product is 2p - 4 - 10 = 0. while the demand function for the same product is (p + 10)(4 + 30) = 7200. Find the market equilibrium point.
5
The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $26, $14, $10, $5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $14, $26, $34, and $42 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $3 $5 $10 $14 $26 $34 $42 In this market, the equilibrium price will be per widget, and the equilibrium quantity will be widgets.
The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for jumpsuits. COSTS (Dollars) 80 72 64 56 24 16 8 0 0 8 0 MC ATC AVC Price (Dollars per jumpsuit) 4 8 12 36 48 60 ■ 16 24 32 40 48 56 QUANTITY (Thousands of jumpsuits) ☐ Quantity (Jumpsuits) 64 For every price level given in the following table, use the graph to determine the profit-maximizing quantity of jumpsuits for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero jumpsuits and the profit-maximizing quantity of jumpsuits.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. 72 80 Produce or Shut Down? Profit or Loss?
Which of the following is the objective? O Demand for electronic smoke detectors (20,000) O Unit retail price ($29.50 and $28.00 for electronic and battery-operated smoke detectors, respectively) O In-house production quantity of electronic smoke alarms O Smoke alarm capacity of subcontractor (20,000) O Acme cannot produce or purchase more alarms than the demand O Demand for battery-operated smoke detectors (10,000) Profits O In-house production quantity of battery-operated smoke detectors O Production hours required per unit of the battery-operated smoke detectors (0.10, 0.20, and 0.15 for Fabrication, Assembly, and Shipping, respectively) O Monthly Hours Available for Fabrication, Assembly, and Shipping (2000, 4200, and 2500, respectively) O Quantity of electronic smoke alarms to purchase from the subcontractor
0.50.2 Given the production function q = f(x1, x2) = 1.32 × xx2, input price vector (w1, w2) and output price P, what are correct about the input demands x(w1, w2, p), x (w1, w2, p) ? Numerical results are rounded to the nearest 3-digit. Select one or more: Select one or more: O x (8, 5, 17) = 3.336 and x (8, 5, 17) = 2.202 O x(4, 7, 12) = 4.398 and x (4, 7, 12) = 0.833 O x (8, 5, 16) = 1.874 and x(8, 5, 16) = 1.199 O x (5, 7, 12) = 2.01 and x (5, 7, 12) = 0.982
3. Consider a market for a good with the following demand function: Q = 120-2p where is quantity demanded and p is the price. Suppose the cost of producing Q units of the good be: C(Q) = Q² (a) If this market is perfectly competitive, what will be market price (pc) of the good and total output, (Qc).
New Zealand possums produce the highest quality fur, due to the large pelts per body size. Demand for New Zealand possums’ products has risen dramatically. This is partly a result of the conservation benefits of harvesting New Zealand possums. This has made the product seem more environment friendly than other fur products and boosted sales to concerned consumers. Assume that the possums market satisfies all the attributes of a competitive market. Further assume that high grade possum furs are the most expensive input into the possum fur production function. 1. Use a graph of the market for possum fur to demonstrate the effect of its environmentally friendly status on the market equilibrium. 2. Graph the reaction of an individual incumbent firm to the increase in market demand. In your graph, identify the firm’s revenue and cost structures. 3. What would you predict would happen to long-run industry supply if the price of possum fur increased as possum culling increased their…
PLEASE SUBMIT AN IMAGE OF THE REQUESTED ILLUSTRATION DISCUSSED BELOW. (PLEASE MAKE SURE YOU LABEL ALL APPROPRIATE COMPONENTS AND USE CORRECT NUMERICAL SCALES FOR YOUR GRAPH). The table below illustrates the linear supply and demand curves for the high-end electric car market in Yakima. Now, if we assume the market for electric cars in Yakima is an efficient market, please illustrate (graph) this market and label the resulting functions and surpluses (yes, do not forget about labeling the surpluses) Quantity Supplied (In units) 0 40 80 120 160 200 240 Price $0.00 $15,000.00 $30,000.00 $45,000.00 $60,000.00 $75,000.00 $90,000.00 Quantity Demanded (In units) 480 400 320 240 160 80 0
Suppose the market for quiche is perfectly competitive, so sellers take the market price as given. Hilary manages a restaurant that offers quiche for sale. The following graph plots Hilary's weekly supply curve (orange line). Point A represents a point along her supply curve. The price of quiche is $2.25 per slice, which is given by the black horizontal line. PRICE (Dollars per slice) 9.00 8.25 7.50 6.75 6.00 5.25 4.50 3.75 3.00 2.25 1.50 0.75 0 0 Price Supply 2 4 Hilary's Weekly Supply A 6 8 10 12 14 16 QUANTITY (Slices of quiche) 18 + 20 22 24 Using the previous graph, you can determine that Hilary is willing to supply her 6th weekly slice of quiche for $ per slice, the producer surplus earned from supplying the 6th slice of quiche is $ Suppose the price of quiche were to rise to $3.00 per slice. At this higher price, Hilary would receive a producer surplus of $ slice of quiche she sells. Since she receives $2.25 from the 6th

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