Kyle operates a transportation company that produces travel services using Cars (C), Drivers (D) and gasoline (G). His production technology is: q=10C ½ D ¼ G ¼. In the short run he has 16 cars for which he pays a total fee of R in rent. He can hire Drivers for wage w and buy gas for price v in competitive markets. He sells his travel services in a price taking market for price P. A. Set up an expression for Kyle’s short run Profits as a function of his input choices. B. Find Kyle’s first order conditions for profit maximization. Express Kyle’s optimum choice of Drivers and Gasoline as functions of (P, v, w). C. Find Kyle’s short run supply curve. Then, given w=v=4 graph the curve
Kyle operates a transportation company that produces travel services using Cars (C), Drivers (D) and gasoline (G). His production technology is: q=10C ½ D ¼ G ¼. In the short run he has 16 cars for which he pays a total fee of R in rent. He can hire Drivers for wage w and buy gas for price v in competitive markets. He sells his travel services in a price taking market for price P. A. Set up an expression for Kyle’s short run Profits as a function of his input choices. B. Find Kyle’s first order conditions for profit maximization. Express Kyle’s optimum choice of Drivers and Gasoline as functions of (P, v, w). C. Find Kyle’s short run supply curve. Then, given w=v=4 graph the curve
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
5. Kyle operates a transportation company that produces travel services using Cars (C), Drivers (D) and gasoline (G). His production technology is:
q=10C ½ D ¼ G ¼.
In the short run he has 16 cars for which he pays a total fee of R in rent. He can hire Drivers for wage w and buy gas for price v in competitive markets. He sells his travel services in a price taking market for price P.
A. Set up an expression for Kyle’s short run Profits as a function of his input choices.
B. Find Kyle’s first order conditions for profit maximization. Express Kyle’s optimum choice of Drivers and Gasoline as functions of (P, v, w).
C. Find Kyle’s short run supply curve. Then, given w=v=4 graph the curve.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 16 images
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.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education