Question: 1 A firm produces output according to the following production function: q = 10 K^1/4 L^1/4 The price of capital is r = 9 and the price of labor is w = 25 and there is a set-up cost F = 90 that the firm only pays if it decides to produce in the market. If the firm wants to produce 'q' units of output, solve the cost minimization problem. Obtain total cost C* (as a function of output level q). The firm is operating within a perfectly competitive industry. Use the solution to the cost minimization problem to solve the profit maximization problem of this firm for a given price p. Then, knowing that the firm is producing 30 units at maximum profit, do the following: Determine the market price. Please show work. a. 10 b. 20 c. 12 d. 18
Economics: Industrial Economics
Question: 1
A firm produces output according to the following production function:
q = 10 K^1/4 L^1/4
The
The firm is operating within a
Determine the market price. Please show work.
a. 10
b. 20
c. 12
d. 18
Question 2:
A firm produces output according to the following production function:
q = 10 K^1/4 L^1/4
The price of capital is r = 9 and the price of labor is w = 25 and there is a set-up cost F = 90 that the firm only pays if it decides to produce in the market. If the firm wants to produce 'q' units of output, solve the cost minimization problem. Obtain total cost C* (as a function of output level q). The firm is operating within a perfectly competitive industry. Use the solution to the cost minimization problem to solve the profit maximization problem of this firm for a given price p. Then, knowing that the firm is producing 30 units at maximum profit, do the following:
Determine the firm's profit. Please show work.
a. 276
b. 540
c. 360
d. 180
Question 3:
A firm produces output according to the following production function:
q = 10 K^1/4 L^1/4
The price of capital is r = 9 and the price of labor is w = 25 and there is a set-up cost F = 90 that the firm only pays if it decides to produce in the market. If the firm wants to produce 'q' units of output, solve the cost minimization problem. Obtain total cost C* (as a function of output level q).
Now assume that the firm operates under
p = 115 - 2 g
Use the solution to the cost minimization problem to solve the profit maximization problem of this firm. Then do the following:
Determine this firm's supply of output q*. Please show work.
a. 20
b. 25
c. 15
d. 30
Thank you for your support and help Training Agent!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
