Consider a production function Y = KªL1-«.a) What is the marginal product of capital? Write down the formula and show your working.b) Write down the profit maximization problem for the firm. c) Use your previous answer to (a) and (b) to write down the labor demandcurve which relates the quantity of labor the firm demands to the price oflabor (i.e. the wage).d) If the quantity of labor supplied increases by 1%, what is the increase inthe firm's output? State your answer in terms of expenditure shares.e) If the quantity of labor supplied increases by 1%, what is the change inthe real wages of workers?f) If this production function is to represent the US economy, what is areasonable value to choose for a? Why?

Since you posted multiple subparts, we will answer first three for you. If you want any particular…

Answered: Consider a production function Y…

Consider a production function Y KªL1-a. a) What is the marginal product of capital? Write down the formula and show your working. b) Write down the profit maximization problem 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: In the short run, the hot dog seller Doug's Dogs has a single variable input, labor (1) W = 50 The…

Q: Show that the law of diminishing marginal productivity holds for the production function Q=6L²-0.2L'

A: Production function exhibits the relationship between the input and output. Input are the factors…

Q: For a producer under complete competition, the following production function applies. Q = F (K, L)…

A: Q = 4L L = 0.25Q When Q = 50, L = 12.5 Total cost (TC) = wL + rK TC = 10 x 12.5 + 5 x 4 TC = 125 +…

Q: 5- A fast food restaurant currently pays $5 per hour for servers and $50 per hour to rent ovens and…

A: The data presented In the question above is as follows:- Per hour money paid to servers = $5 Rent…

Q: Consider the production function Q = 4L0.4K0.5 where Q is the total output, L is labour and K is…

A: Production function shows the different combinations of factors of production that can be used to…

Q: Henry owns a Boba tea shop and produces delicious drinks under the production function q = 5KL where…

A: No, the marginal product of labor is constant (for a given K.

Q: Suppose we are given a production function: q = [alº + (1 – a)kP]P a. Please show that MP;= (1 –…

A: Given production function q=alρ+1-akρ1ρ ............ (1)

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: A firm has the following production function: f (E, K) = EiK Which means they have the following…

A: A firm maximizes profit by hiring the number of workers to the point where marginal product of the…

Q: The Acme Anvil Company's output is given by the Cobb-Douglas Production function P = 60L²/3K²/3,…

A: We are going to use lagrange maximisation technique to answer this question.

Q: Suppose a firm’s production function is given as; Y= { xa1 x1-a2} i.Derive the marginal rate of…

A: Production function illustrates the relationship between the output produced in a production process…

Q: onsider the following (Cobb-Douglas) production function: f(x1, x2) = Ax1α1 x2α2 , where A, α1, α2 >…

A: The production function shows the relationship between the output and input. The Marginal product is…

Q: 6. Suppose the wage is $8, the rental rate of capital is $128, and the firm's CRS Cobb-Douglas…

A: Cobb–Douglas production function is the production function which represent the relationship between…

Q: e. If their budget is $300 then there is a constraint L+ K = 300. Use Lagrange multipliers (2) to…

A: Production Function P = 60L23 K13 P = Number of Anvil ProductionL =Amount spent on LabourK =…

Q: 3.3 In the short run, a firm cannot vary its capital, R=2, but it can vary its labor, L. It produces…

A: The production function is the mathematical relationship between a firm's output and the inputs…

Q: A fam han the production function F(L, K)- 2 min(L, 10K). The curent input level in (L. K)- (12, 1).…

A: The marginal product of capital (MPK) measures the change in output produced due to the change in…

Q: The production function of a firm is f(x, y) = x + y. The marginal product of input x diminishes…

A: The production function shows the relationship between the input used and the output produced. The…

Q: combination of labor and capital maximizes output with a cost of Birr 720? b. What is the maximum…

A: With the given production function, it can be inferred that the firm uses two inputs labor (L) and…

Q: Consider tne production functions for good X and good Y: X = K? + L; Y = 20\KL A. Show and discuss…

Q: dough, with the production function set as f(c,d) = 0.5d0.5. Suppose that a pizza s price of cheese…

A: Production function:fc, d = c0.5 d0.5Cost function:wc c + wd d = CPizza is sold for 6 pounds.

Q: QUESTION 1 Suppose the short-run production function is given by f(x)= 8\x What is the Marginal…

A: A production function illustrates the relationship between the quantity of inputs used and the…

Q: A firm has a production function f(L,K)= L¹/2K¹/4. The price of its output is p = 4. Suppose the…

A: Long run profit maximization process is the determination of the resources which helps the economy…

Q: Answer All Questions 1. A firm has the following short run production function Q = 50L + 6L² – 0.5L…

A: We are going to find average product of labour, marginal product of labour and single variable…

Q: A firm producing cars. The production function for shoes (Q) is: Q = K'² L2 where K is capital and L…

A: Given: Q=K1/2L1/2 Price of K=$8 Price of L=$2

Q: 1. What is the optimal level of Labor that maximize marginal production if the production function…

A: the marginal product or marginal physical productivity of an input is the change in output resulting…

Q: 4. Considertheproductionfunction f(L;K)=L+K. a. Suppose K is Öxed at 2. Find algebraic expressions…

A: Given, Production function, f(L;K)=L+K.

Q: Demonstrate your understanding of the law of diminishing marginal returns.

A: Law of diminishing marginal productivity states that the marginal production from the additional…

Q: 3. Suppose that the production function is Q=L075K025, a) What is the average product of labor…

Q: The production function for good X in the table below exhibits increasing marginal returns to…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: 1. Assume that a firm has the following production function: q = L0.50.6 d. Determine, both, the…

A: The production function is the equation describing the relationship between the quantities of…

Q: 4. A firm producing cars. The production function for shoes (Q) is: Q = K"² L"² where K is capital…

A: Answer -

Q: Question 1. Suppose a small firm employs Capital (K) and labour (L) at its production of output. The…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Q4. The two production functions q 2k0.5 and q = 20/0.5 are available for a firm. The sum of the…

A: q=2k0.5 q=20l0.5 k+l=100

Q: d. Does capital obey the "law of diminishing returns?" Explain. e. Suppose that firm wants to…

A: Given: Production function: Q=K1/2L1/2 Price of K=$8 Price of L=$2 Note: Due to multiple subparts…

Q: g. Now suppose that firm is faced with the same problem as in (e and f) except that firm has a fixed…

A: Given: Production function: Q=K1/2L1/2 Price of K (R)=$8 Price of L (W)=$2

Q: Suppose that a firm has a production function given by: q= 10 L² K. The firm has 10 units of capital…

A: The production function shows the relationship between the input used and the output produced.The…

Q: [alº + (1 – a)k°jô a. Please show that MPx= (1 – a)()P-1 and MP= a(-)P-1 Suppose we are given a…

A: A production function expresses the relationship between the inputs and the output produced with the…

Q: A firm uses inputs L and K to produce and good Q. The production function is Q-0.5LK. In the…

A: Costs refer to the expenses incurred in producing goods or services, such as labor, materials,…

Q: 1. Assume that the production of wine requires land (T) and labor (L) and it follows diminishing…

A: The diminishing returns to scale means that each added input (labor) will result in a decreasing…

Q: e. If their budget is $1200 then there is a constraint L+ K = 1200. Use Lagrange multipliers (2) to…

A: Total cost equation - L + K = 1200 ℒ= (120L0.7 K0.3)+λ (1200-L-K)∂ℒ∂L= 84L-0.3K0.3-λ=0…

Q: Tiva has a crafts store that makes jewelry using beads (B) and copper (C). Her production function…

A: Given Production function: Q=B0.4C0.4 .... (1) Where B denotes beads and C denotes…

Question

Consider a production function Y = KªL1-«.
a) What is the marginal product of capital? Write down the formula and show your working.
b) Write down the profit maximization problem for the firm.

c) Use your previous answer to (a) and (b) to write down the labor demand
curve which relates the quantity of labor the firm demands to the price of
labor (i.e. the wage).
d) If the quantity of labor supplied increases by 1%, what is the increase in
the firm's output? State your answer in terms of expenditure shares.
e) If the quantity of labor supplied increases by 1%, what is the change in
the real wages of workers?
f) If this production function is to represent the US economy, what is a
reasonable value to choose for a? Why?

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

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

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

Consider the production function Y AK°Lta, where A is a constant, L is labour, K is capital and a 0. Which of the following is true? O The marginal product of labour is constant O The marginal product of labour is diminishing There are increasing returns to scale O There are decreasing returns to scale
Grease Tech produces oil changes. The production of oil changes reles on both capital (K) and labor (L) and is combined in the following production function F (K, L) = KILL Take the derivative of this production function with respect to capital. What is the marginal product of capital evaluated at (le. just plug in the numbers) 64 units of capital used and 16 units of labor?
With a production function like Y=zN, which of the following must be true at the optimum? A).The marginal product of labor is smaller than real wage. B).The marginal product of labor is bigger than real wage. C).The representative firm makes positive profits. D). Profits of the representative firm are zero.
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Refer to the graph shown. Within which section(s) of the production function is marginal product decreasing? A B C Number of workers O Band C O A O B O A and B Output
Please answer fast please arjent help please answer
ONLY answer question b. relative to question a.
1E
You have been doing research for a firm andhave discovered that the firmâ€™s averageproduct of capital is decreasing. If capital is the onlyvariable input, what does this imply about the firmsmarginal product of capital?
Answer correctly with explanation A firm has the production function F(L, K) = 2 min{L, 10K7 . The current input level is (L, K) = (12, 1). What is the marginal product of capital? Select one: a. The marginal product of capital is not defined. b.4 c. 20 d. 2
Suppose a firm’s production function is ? = ?2?. a) Determine the labor and capital demand functions. b) Are capital and labor normal or inferior inputs in this production process?
Please provide answer in 1 hr please urgent please