Ais Ezhel employs Dj Artz (A) and Bugy (B) to produce songs according to following production function: E(A, B) = A³/4B?/4 %3D The hourly cost of Dj Artz is Pa and the hourly cost of Bugy is Pg. a) Set up the Lagrangian function for the cost-minimization of the store for a given production level E*. Determine the optimal Artz to Bugy ratio. Describe the long-run output expansion path. b) Let Pa = 30,Pg = 10. Suppose Ezhel wishes to produce 10,000 songs. How much hours Dj Artz and Bugy should he employ? How much will it cost to produce? c) Suppose that Ezhel wants to produce is now 18,371 songs, but Bugy is not available to contribute his album more than previous level in the short-run. Assuming he is unable to employ Bugy for more hours, how much will it cost to meet the new production level?

Ais Ezhel employs Dj Artz (A) and Bugy (B) to produce songs according to following production function: E(A, B) = A³/4B?/4 %3D The hourly cost of Dj Artz is Pa and the hourly cost of Bugy is Pg. a) Set up the Lagrangian function for the cost-minimization of the store for a given production level E*. Determine the optimal Artz to Bugy ratio. Describe the long-run output expansion path. b) Let Pa = 30,Pg = 10. Suppose Ezhel wishes to produce 10,000 songs. How much hours Dj Artz and Bugy should he employ? How much will it cost to produce? c) Suppose that Ezhel wants to produce is now 18,371 songs, but Bugy is not available to contribute his album more than previous level in the short-run. Assuming he is unable to employ Bugy for more hours, how much will it cost to meet the new production level?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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