Let the hourly production function for Fred's Fountains be the following: .251.5 The rental rate of capital, v, is $80 and the wage rate, w, is $40. In the short run, assuming K = 16, answer the following: а. What is the short run total cost function? b. What is the short run supply function? If the price of fountains is $240, to maximize profit, how much labor С. should they use and what is the level of output and profit?
Let the hourly production function for Fred's Fountains be the following: .251.5 The rental rate of capital, v, is $80 and the wage rate, w, is $40. In the short run, assuming K = 16, answer the following: а. What is the short run total cost function? b. What is the short run supply function? If the price of fountains is $240, to maximize profit, how much labor С. should they use and what is the level of output and profit?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Let the hourly production function for Fred's Fountains be the following:
9=K:25,.5
The rental rate of capital, v, is $80 and the wage rate, w, is $40.
In the short run, assuming K = 16, answer the following:
а.
What is the short run total cost function?
b.
What is the short run supply function?
If the price of fountains is $240, to maximize profit, how much labor
С.
should they use and what is the level of output and profit?
d.
Given the above situation, Graph R and SC. What about the graph tells
you that the second order conditions for profit maximization are satisfied?
Is the firm using the right amount of K and L to minimize cost in the
е.
lorlg run? How do you know?
Now calculate the long-run, quantity contingent, input (or factor)
demand functions for K and L. At a price of $240 for fountains, how much K
and L should they be using?
f.
g.
Now, for the above scenario, what are the long run profit maximizing
input demand functions?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea0084d8-63e7-4f56-975c-add2c9289a98%2F5ea3eb95-64e1-4004-a574-1ebe8d2b0248%2F6uag53d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Let the hourly production function for Fred's Fountains be the following:
9=K:25,.5
The rental rate of capital, v, is $80 and the wage rate, w, is $40.
In the short run, assuming K = 16, answer the following:
а.
What is the short run total cost function?
b.
What is the short run supply function?
If the price of fountains is $240, to maximize profit, how much labor
С.
should they use and what is the level of output and profit?
d.
Given the above situation, Graph R and SC. What about the graph tells
you that the second order conditions for profit maximization are satisfied?
Is the firm using the right amount of K and L to minimize cost in the
е.
lorlg run? How do you know?
Now calculate the long-run, quantity contingent, input (or factor)
demand functions for K and L. At a price of $240 for fountains, how much K
and L should they be using?
f.
g.
Now, for the above scenario, what are the long run profit maximizing
input demand functions?
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