A firm has a productivity equation is labour and K is capital. K² where L The unit cost (cost for each unit of production) is c = 2. The price in the market for the good is 15. The wage for each hour is w=10. Also, there is a fix cost equal to K Furthermore, there is a worker with utility equation. U = C² R where C is the consumption and the price of consumption good is P. = 1. The maximum working hours (T) per week are 100. So, T = L + R where R is the leisure time. с Calculate the optimum decision for working hours, leisure time and consumption by the consumer. Then calculate the capital investment by the firm for the maximisation of the profits. (Hind: This is the only worker for the firm and he will decide for the working hours, so the firm will decide for the capital. Assume that L = Q)

A firm has a productivity equation is labour and K is capital. K² where L The unit cost (cost for each unit of production) is c = 2. The price in the market for the good is 15. The wage for each hour is w=10. Also, there is a fix cost equal to K Furthermore, there is a worker with utility equation. U = C² R where C is the consumption and the price of consumption good is P. = 1. The maximum working hours (T) per week are 100. So, T = L + R where R is the leisure time. с Calculate the optimum decision for working hours, leisure time and consumption by the consumer. Then calculate the capital investment by the firm for the maximisation of the profits. (Hind: This is the only worker for the firm and he will decide for the working hours, so the firm will decide for the capital. Assume that L = Q)

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

A firm produces at an output level where the marginal product of labor (MPL) is 50 units and the marginal product of capital (MPK) is 100 units. Suppose that the wage rate (PL) is $25 and the rental price of capital (PK) is $40. a.Is this firm maximzing profit?b.What should the firm do if it is not alocating its budget efficiently?
Consider an economy with one consumer and one firm. The firm produces the output C from the labour L according to the production function f(L)=L/182. The consumer provides labour to the firm and consumes the good C. The consumer can work a maximum of 18 hours a day. Her utility function is u(Le,C)=2C+Le where Le=18-L is her leisure time. What is the time L the consumer should work at the Pareto efficient allocation? None of the other answers. O a. Ob. L=0 O c. L=9 O d. L=3 O e. L=6 thomnt
Given the production function y= f(x1,x2)=x11/3x21/3. The amount of x2 is equal to 216 in the short run. Calculate the factor demand function Given the product price (P) is 6 and the price of factor 1 (w1) is 12, calculate the optimum amount of factor 1. Show your results on a graph. What will happen to the optimum level of factor 1 when both the price of the good and the price of factor 1 increase simultaneously?
A firm produces at an output level where the marginal product of labor (MPL) is 50 units and the marginal product of capital (MPK) is 10 units. Suppose that the wage rate (PL) is $25 and the rental price of capital (PK) is $40. a.Is this firm maximzing profit? b.What should the firm do if it is not alocating its budget efficiently?