Answered: he firm is a price taker for both bar…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Tom Petersen is considering renovating bar stools at Dreamland. The production
function for new bar stools is given by
q= 0.5L0.5
where q is the number of stools produced during the renovation week and l represents the
a number of worker hours employed during the period. The firm is a price taker for both bar stools
(which sell for P) and workers (which can be hired at a wage rate of w per hour).
a. What is the cost function for this firm C(w,q)?
b. What is the supply function for bar stools q(P,w)?
c. What is the profit function for this firm (P,w)?
d. What is the firm’s demand function for labor function L(P,w)?

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