Let the hourly production function for Fred's Fountains be the following:9=K:25,.5The 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 laborС.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 tellsyou 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 theе.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 Kand L should they be using?f.g.Now, for the above scenario, what are the long run profit maximizinginput demand functions?

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?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.

Question

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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?

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