2. The Acme Anvil Company's output is given by the Cobb-Douglas Productionfunction P = 60L2/3K1/3, where P is the number of anvils produced whenL is the amount spent on labor and K is the amount spent on capital.a. What is the production if L = 150 and K = 150?b. Find the marginal productivities.c. Evaluate the marginal productivities with L = 150 and K = 150.d. Interpret the meanings of the marginal productivities found in part c.e. If their budget is $300 then there is a constraint L+ K = 300. UseLagrange multipliers (2) to find the values of L and K that willmaximize production and find the maximum productionf. Find 2. 12| is called the marginal productivity of money and will givethe number additional units produced for each dollar increase in thebudget. Interpret 2 for this problem.Only need paVASe and fl

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

e. If their budget is $300 then there is a constraint L+ K = 300. Use Lagrange multipliers (2) to find the values of L and K that will maximize production and find the maximum production f. Find 2. 12| is called the marginal productivity of money and will give the number additional units produced for each dollar increase in the budget. Interpret 1 for this problem.

e. If their budget is $300 then there is a constraint L+ K = 300. Use Lagrange multipliers (2) to find the values of L and K that will maximize production and find the maximum production f. Find 2. 12| is called the marginal productivity of money and will give the number additional units produced for each dollar increase in the budget. Interpret 1 for this problem.

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

Budget Constraints: Sam has an income of $1000 a week from a rental property he owns. Sam also has a job as a legal assistant where he gets paid $50 an hour for the first 50 hours he works. However, he can’t work for more than 50 hours, so for every hour, he works more than 50 he can work as a cashier making 20 an hour. John’s time endowment is 100 hours. a) Draw and label Sam's budget constraint b) What is John’s maximum potential income? c) What is the price/hour of leisure when Sam works fewer than 50 hours, and more than 50 hours/week? Need help for a b c . Thanks
I am working on practice problems for my midterm and I want to make sure I get them right.
What is the maximum price Sam would be willing to pay to buy a coffee mug? What is the minimum price Sam would be willing to accept to sell a coffee mug he already owned?
Consider the following consumer’s problem: max u(c1 ) + βu(c2) c1c2 subject to c1 + s1 = y1 c2 = y2 + (1 + r)s1 u(c)={1/(1-1/σ}c1-1/σ a) Describe all equations using economic terminology.b) Derive the intertemporal budget constraint for this consumer.c) Set the Langrangean for this problem.d) Find the first order conditions for a maximum.e) What is the effect of an increase in the interest rate on savings? Show in equation and explain.
Question: Finn is in charge of decorations for an upcoming festival, and he is planning to decorate withclovers (C) and flags (F). Suppose his preferences over decorations can be represented by theutility function: U(C,F) = C3/4 F1/4 **For this problem, assume C and F are infinitely divisible so you don’t need to worry about restricting to whole-number answers. a.) Write Finn’s budget constraint as a function of the prices PC , PF and his budget I. b.) Write Finn’s constrained optimization problem in Lagrangian form and derive the threefirst order conditions.
Suppose the utility function for goods x and y is given Utility = U(x,y) = xy +y Suppose price of both x and y is $1. You have total $10 to spend. Suppose price of x changed to $0.5. Price of y and your disposable income remain the same: a. calculates the change in the amount of good x, that is caused by the substitution effect (the effect on consumption due to a change in price holding real income or utility constant). b. calculate the change in the amount of good x, that is caused by the income effect (the effect on consumption due to a change in real income caused by a change in price).
Granny lives in the Woods and consumes only bread and fruits. One week she falls ill and has to ask her niece, Red, to buy her weekly food. Red lives in the City, where the price of fruit is $ 2 per kilogram and the price of bread is also $ 2 per loaf. Red knows that Granny's utility function is given by U(f, b) = In (f) + 2 In (b) and that Granny has allocated $ 60 of her income for food each week. Heading to Granny's house in the Woods with the food bought from the City in her basket, Red unexpectedly meets the infamous trader B. B. Wolf, which offers to buy or sell food at a price of $ 3per kilogram of fruits, and $ 6per loaf of bread. Show graphically, what is the Red's budget line before meeting with Wolf and the budghet line after meeting with Wolf?
A consumer has preferences on Amazon original shows (x), and the composite good (y) described as u(x,y) = x2y (HINT: MUx = 2xy and MUy = x2) and she has I = $300 budget in total. Assume pY = $1, so we can think of y as the saved dollars in her pocket for other uses. Now, if she is not an amazon prime member, each show costs pX = $10, but if she is a prime member, then pX = $4. Amazon prime membership costs $120. (a) Draw her feasible budget set on the x-y axis for the no-prime-membership case, and the prime-membership case, separately. (b) If she chooses not to be a prime member, what is her optimal bundle (x,y) ?(c) If she chooses to become a prime member, what is her optimal bundle (x,y) ?(d) What is her optimal utility in (b)?in (c)? Would she want to become a prime member?
for small change in x
Christin has a monthly income of $500 that he allocates between two goods: food and clothing. Suppose food costs $8 per pound and clothing cost $5 per piece. a) Draw her budget constraint properly labelling the axes. 0.5 b) Suppose also that her utility function is given by ?( f,c)= 2f ^2 + c^2 . What combination of food and clothing does she buy in order to maximize her utility? Show your work mathematically. Round your answer to two (2) decimal points.
Suppose you have the following indirect utility function: V(Pa, Py, I) = In PxPy What are marshallian demands for x and y? I (a) (9x9y) = (22) (b) (9,9y) = (In, In 2) (c) (9, 9y) = (exp(2p/py), exp(2ppy)) I (d) (9x, gy) = (2pr+py' px+2py) What is the expenditure function for the associated expenditure minimization problem? (a) E(pa, Py, U) = (P + Py) ln(U) (b) E(pa, Py, U) = √exp(U)Papy (c) E(pa, Py, U)= (p²+p²) In(U) (d) E(pa, Py, U) = exp(U)²papy What are the individual's Hicksian demands for goods x and y? (a) (h₂, hy) = ((BU)¹/², (PU) ¹/²) (b) (ha, hy) = (RU, DU) (c) (ha, hy) = ((2 exp(U))¹/², (exp(U))¹/²) -1/2 (d) (hx, hy) = ((P₂PzU)−¹/², (P₂PzU)-¹/2) Are x and y complements or substitutes?
If the consumer's budget constraint is given by 4P + 2B = 50 where P is Pizza and B is Burgers, the following bundles of Pizza and Burger would be on the budget constraint: P = 5; B = 10 P = 2; B = 21 P = 10; B = 20 %3D P = 2; B = 24