3. Elsa's handicrafts has the production function f(x1,x2) = (min{x1 ,2x2})2, where x, is theamount of plastic used, x, is the amount of labor used, and f(x1,x2) is the number of lawnornaments produced. Let w, be the price per unit of plastic and w, be the wage per unit oflabor.а.What is Elsa's cost function c(w1,w2,y)?b. If wi = w2 = 1, then what is Elsa's marginal cost of producing y units of output?What is the number of units of output that she would supply at price p? At thesefactor prices, what is her average cost per unit of output?c. If the competitive price of the lawn ornaments she sells is p = 48, and w, = w2 = 1,howmanywill she produce? How much profit will she make?d. More generally, at factor prices w, and w2, what is her marginal cost? At thesefactor prices and an output price of p, what is the number of units she will chooseto supply?

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Elsa's handicrafts has the production function f(x1,x2) = (min {x1 ,2x2})?, where x, is the amount of plastic used, x, is the amount of labor used, and f(x1,x2) is the number of lawn ornaments produced. Let w, be the price per unit of plastic and w2 be the wage per unit of

Elsa's handicrafts has the production function f(x1,x2) = (min {x1 ,2x2})?, where x, is the amount of plastic used, x, is the amount of labor used, and f(x1,x2) is the number of lawn ornaments produced. Let w, be the price per unit of plastic and w2 be the wage per unit of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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