5. Suppose the production function is given by f(E, K) $2 and the price for a unit of capital is $32. The output level is q = 144 and the price o output is $30. The hourly wage ra (a) Write a firm's CMIN problem. (b) Impose FONC to find MP(E) = w and MP(K) =r. %3D
5. Suppose the production function is given by f(E, K) $2 and the price for a unit of capital is $32. The output level is q = 144 and the price o output is $30. The hourly wage ra (a) Write a firm's CMIN problem. (b) Impose FONC to find MP(E) = w and MP(K) =r. %3D
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.7P
Related questions
Question
![5. Suppose the production function is given by f(E, K) = E'/³K²/3. The hourly wage rate is
$2 and the price for a unit of capital is $32. The output level is ĝ = 144 and the price of the
output is $30.
(a) Write a firm's CMIN problem.
(b) Impose FONC to find MP(E) = w and MP(K) = r.
%3D](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0ef15d4b-45da-41cb-ac30-acee483c8c4c%2F20f3e502-f0ba-4995-8011-92b19fe6040b%2Fszrmhd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5. Suppose the production function is given by f(E, K) = E'/³K²/3. The hourly wage rate is
$2 and the price for a unit of capital is $32. The output level is ĝ = 144 and the price of the
output is $30.
(a) Write a firm's CMIN problem.
(b) Impose FONC to find MP(E) = w and MP(K) = r.
%3D
![(f) If the price is $30, how much will this firm's profit or loss be? Should the firm stay in
business or exit?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0ef15d4b-45da-41cb-ac30-acee483c8c4c%2F20f3e502-f0ba-4995-8011-92b19fe6040b%2Fezz0479_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(f) If the price is $30, how much will this firm's profit or loss be? Should the firm stay in
business or exit?
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