3. Optimal inputs: A firm has a production function, y = ln(l, k) in a market with pricesPy = 20, pe = 4, Pk = 5. Find the firm's profit maximizing choice for y, l, and k. Howmuch profit do they earn?

Given Production function: y=ln(lk) ... (1) price of good y is 20 Price of labor = 4 Price…

Answered: = Optimal inputs: A firm has a…

= Optimal inputs: A firm has a production function, y Py = 20, pe = 4, Pk much profit do they earn? In(l, k) in a market with prices 5. Find the firm's profit maximizing choice for y, l, and k. How

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Optimal inputs: A firm has a production function, y = ln(l, k) in a market with prices
Py = 20, pe = 4, Pk = 5. Find the firm's profit maximizing choice for y, l, and k. How
much profit do they earn?

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Suppose a firm uses a single input to produce a single output according to a production function f(x) = 10√x where x is the number of units of input. The output initially sells for £120 per unit. The input costs £20 per unit. A change in the market causes the product price to increase from £120 per unit to £200 per unit, all else equal. How does this change in product price affect the firm's profit maximizing level of profits? a. Profits increase by £16,000 Ob. Profits do not change Profits increase by £8,000 d. None of the other answers is correct Profits increase by £9,000 f. Profits increase by £18,000 g. Profits increase by £50,000 h. Profits increase by £32,000 C. e.
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