(a) Suppose we have the following production function: Q= Suppose K is fixed in the short- run at 16. State the firm's short-run cost minimization problem given the fixed input. Discuss.< (b) Letr = $200 and w = $300. Derive the short-run cost function so that we have costs as a function of Q: eg C(Q) = ? Show your work/reasoning.< (c) Show that average costs first fall then rise with greater output. Note: look at Q in the range 0 to 100. You can do this in a table or mathematically. Why does AC fall then rise? < (d) State the firm's profit maximizing problem. (e) Let P = $600. Find optimal output where r = $200 and w = $300. You can do this in a table or mathematically. What are profits? < (f) A break-even price is one where the best a firm can do is earn zero profits. That is, total revenues equal total costs. How is the break-even price related to average costs? Explain. < fac

(a) Suppose we have the following production function: Q= Suppose K is fixed in the short- run at 16. State the firm's short-run cost minimization problem given the fixed input. Discuss.< (b) Letr = $200 and w = $300. Derive the short-run cost function so that we have costs as a function of Q: eg C(Q) = ? Show your work/reasoning.< (c) Show that average costs first fall then rise with greater output. Note: look at Q in the range 0 to 100. You can do this in a table or mathematically. Why does AC fall then rise? < (d) State the firm's profit maximizing problem. (e) Let P = $600. Find optimal output where r = $200 and w = $300. You can do this in a table or mathematically. What are profits? < (f) A break-even price is one where the best a firm can do is earn zero profits. That is, total revenues equal total costs. How is the break-even price related to average costs? Explain. < fac

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 plastic bins using labor (measured in man-hours) and capital (measured in machine-hours), according to the production function Q = f(L,K) = LK, where Q is the number of plastic bins produced. Suppose that the cost of labor is $20 per worker-hour and the cost of capital is $10 per machine-hour. What is the cost minimizing input combination if the firm wants to produce 28,800 plastic bins? Hint: The marginal products are MP, = K and MPg = L.
Provethatthetechnologyf(L,K)=L2+K2 exhibitsincreasingreturnstoscale. What is the formula for the average product of capital? For the total cost curve TC(q) = q3, prove the technology exhibits decreasing returns to scale
Could you solve d,e,f ? Thank you
A firm has the production function q = f(L, K) = min{L¹/2, K1¹/2}. This firm has: increasing returns to scale decreasing returns to scale O None of the above O constant returns to scale
6
5. The production function is given by y=x₁ + 2x2. If w₁ = 10, w₂ = 8, will the firm use input factor 2 to minimize the cost? In what case will the firm use input factor 2?
10. For the cost function CIC) = 100 - 20 - 302, the average fixed cost of producing 2 units of output is a. 100 B. 50 C.3 d. 2
Please help solve for (b) what is long run cost in a?
30. The production function is f(L, M) = 4L1/2 M¹2, where L is the number of units of labor and M is the number of machines used. If the cost of labor is $49 per unit and the cost of machines is $16 per unit, then what is the total cost of producing 5 units of output?
M1
Firm "Happy Capitalist" has following production function: f(K, L) = 2*k0.2L0.8. Furthermore, it is known that cost of capital (r) is equal to 2 and cost of labour (w) is 4. Having said that, capitalist wishes to maintain an output of 250 at lowest possible cost. We ask: a) Solve cost minimisation. Also, is it a corner solution or an interior solution; b) Graph previous result: isoquant and isocost of production; c) Determine average productivity of each factor; d) Is it a function with returns to scale of what type, increasing, decreasing or constant? e) Calculate elasticity of input-output