Imagine a perfectly competitive wood industry composed of 240 identical firms. The production output, q for each firm is determined by the function 9 K1/2* L¹1/2, where K represents capital and L stands for labor. The $25 and PL = prices for capital and labor are PK $4, respectively. With = = labor fixed at 25 units, and the market demand described by Qd = 260 2P, what would be the economic profit or loss at equilibrium for these firms?

Imagine a perfectly competitive wood industry composed of 240 identical firms. The production output, q for each firm is determined by the function 9 K1/2* L¹1/2, where K represents capital and L stands for labor. The $25 and PL = prices for capital and labor are PK $4, respectively. With = = labor fixed at 25 units, and the market demand described by Qd = 260 2P, what would be the economic profit or loss at equilibrium for these firms?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.1P: A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new...

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Question

Imagine a perfectly competitive wood industry composed of 240 identical firms. The
production output, q for each firm is determined by the function
9 =
K1/2* L¹1/2, where K represents capital and L stands for labor. The
$25 and PL
prices for capital and labor are PK
=
$4, respectively. With
labor fixed at
25 units, and the market demand described by
Qd = 260 2P, what would be the economic profit or loss at equilibrium
for these firms?
-98
-99
99
98
=
=

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