Consider a firm with production function: Y-KiLi. Suppose there is perfect competition. The real rental_rate of capital is n=1 and the real wage is w=4. The firm wants to minimise its costs subject to producing at least one unit of the good; i.e. it was to minimise its costs subject to Y≥ 1. 1) What is the value of the ratio? 22 2) What is the value of L 3) What is the minimum cost for the firm?

Consider a firm with production function: Y-KiLi. Suppose there is perfect competition. The real rental_rate of capital is n=1 and the real wage is w=4. The firm wants to minimise its costs subject to producing at least one unit of the good; i.e. it was to minimise its costs subject to Y≥ 1. 1) What is the value of the ratio? 22 2) What is the value of L 3) What is the minimum cost for the firm?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Suppose that a firm has production function F(L, K) = L2/3 K1/3 for producing widgets, the wage rate…

A: Opportunity cost in economics refers to the value of best next alternative foregone. It is the most…

Q: You are given the profit function: Profit = 100Q – Q2 – 100 – 0.5Q2 a. In words, how would you find…

A: The objective of any firm undertaking production in the market is to maximize profit. Firms earn…

Q: In the short run, the firm's amount of capital equipment is fixed at k = 100. The rental rate for k…

A: As per Bartleby guidelines, providing solutions for first four parts.IntroductionCost and production…

Q: 2. The market for a slice of pizza in Oakland is highly competitive. The market demand for a slice…

A: In short run equilibrium firm can earn positive, negative or zero profits. But it will shut down its…

Q: Exercise: A firm produces output according to the following production function: q = A K1/4 L1/4 The…

A: Production function:Production is a function of land labor capital and entrepreneurship. It includes…

Q: 0.2 2. A seller's production function is q = f(k,1) = (kl), w = v = 1, and the competitive output…

Q: Consider the production function Q = 6K//3L/2, where Q, K, and L denote the quantities of output,…

A: Profit = TR – TC TR = P*Q TC= wL + r K w = 12, r = 0.16, so, TC= 12L + 0.16 K The profit function as…

Q: (a) Write a firm's short-run profit maximization problem. (b) Find a firm's marginal product of…

A: "Since you have asked multiple parts, we will answer only first three parts for you. If you have any…

Q: 2. A firm producing hockey sticks has a production function given by q = 2√kl The price of labor is…

A: A cost function is considered as an expression that provides a relationship between the overall…

Q: 3: Suppose a firm's production function is q = 2L+5K, the wage is w = 4, and the rental rate of…

A: Cost function is a mathematical equation that estimates the cost of a product given the price of its…

Q: A firm has a production function Q in function of K and L that can be written as follows: Q = 2/K/L…

A: Here, we have Production function, Q=2KL or Q=2K0.5L0.5 Rental rate of a unit of capital is given…

Q: Consider a firm with production function: LK 3 (a) Find the marginal product of labor, MPL. Next,…

A: A firm has a choice of either maximization of output given the cost constraint or the minimization…

Q: A firm has a production function Q in function of K and L that can be written as follows: Q = 2/K/L…

A: The production function is a model that expressed the relationship between inputs (like labor and…

Q: Assume a firm has the following short-run production function: ) they would employ? ), what is the…

A: The change in q(output) due to the change in l(labor) is measured by MPL(marginal product of labor).…

Q: Question 4. Suppose in the short run a firm's production function is given by q = L1/2*K¹/2, and…

A: Marginal cost of production means the additional cost incurred by producing one unit of a product.…

Q: 2. Assume that a firm has the following production function; q = L0.5K0.5. Its capital is fixed at K…

A: Fixed cost does not change and does not depend on production. Variable cost increases with increase…

Q: A firm has the following production function: q = L - K Assume the firm must pay each unit of labor…

A: In the short run, capital is fixed but in the long run all inputs are variable.In the long run, cost…

Q: A firm has the production function q = K0.25L0.25 , where K is capital, L is labor, and q is output.…

A: ***Since the third subpart of the question has not been mentioned clearly, so, the expert has solved…

Q: (a) Let ƒ : R→ R+ be a a firm's differentiable production function satisfying the usual assumptions.…

A: *Since you have posted multiple questions ,following our guidelines we will only solve the first one…

Q: A firm produces output according to the production function: Q=F(K.L) = 4K - 8L a. How much output…

A: A firm will minimise its cost at a point where marginal rate of technical substitution is equal to…

Question

Consider a firm with production function:
Y-KIL.
Suppose there is perfect competition. The real rental rate of capital is n=1 and the real
wage is w=4. The firm wants to minimise its costs subject to producing at least one unit of
the good; i.e. it was to minimise its costs subject to
Y 2 1.
1) What is the value of the ratio?
즐?
2) What is the value of L
3) What is the minimum cost for the firm?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

can you show me steps to solve this
Suppose the long-run production function for a competitive firm is f(x1,x2)= min {x1,2x2}. The cost per unit of the first input is w1 and the cost of the second input is w2. .a. Find the cheapest input bundle, i.e. amount of labor and capital, that yields the given output level of y. .b. Draw the conditional input demand functions for labor and capital in the x1-y and x2- y spaces. .c. Write down the formula and draw the graph of the firm’s total cost function as a function of y, using the conditional input demand functions. What is the relationship between the returns to production scale and the behavior of the total costs? .d. Write down the formula and draw the graph of the average cost function, as a function of y. .e. Write down the formula and draw the graph of the marginal cost function, as a function of y.
4. A competitive firm has the three-factor production function f(x, y, z) = (x + y)2/3z4/3. The factor prices used to be w = 4, wy = 2, and w, = 1. Suppose %3D that the price of factor y doubled while the other two prices stayed the same. Then the minimum cost of production: A. doubled. B. increased by more than 50% but less than 100%. C. increased by less than 50%. D. stayed the same.
Only typed answer A firm has the production function Q = K^0.8L^0.2. The wage is W and the rental rate on capital is R. Derive the long-run demand functions for capital and labor. Using Lagrangian is optional.
The answer should be typed
handwrite it out step by step
Please help solve for (b) what is long run cost in a?