Refer to the above information.Production Techniques:IIIIIIVLabor45nСapital31Answer the next two questions on the basis of the following information: Suppose30 units of product A can be produced by employing just labor and capital in the fourways shown below. Assume the prices of labor and capital are $3 and $4respectively. If the price of product A is $1.00, the firm will realize:1)an economic profit of $4.2)an economic profit of $10.3)an economic profit of $11.4) a loss of $4.

Profit=Total revenue-Total costNow,Total revenue=quantity*priceTR=30*1TR=$30

Answered: Refer to the above information.…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

qUESTION 3 Please help me figure out which of the following multiple choice questions are correct. Please tell me which choices are correct and which are wrong
Problem 3. Maria Bakery sells cupcakes. The production of cupcakes takes both raw ingredients, and l is hours of labor. The daily production function for cupcakes is given by q = ½ * g * l + l^2 - 20 where output is in dozens of cupcakes, g is poinds of raw ingredients, and l is hours of labor. The cost of a pound of raw ingredients is pg = $1 while the cost of an hour of labor is pl = $12. What is the optimal ‘number’ of pounds of raw ingredients to use per hour of labor? (Hint: Consider the marginal productivity of investment of the inputs.) A standard day requires about 25 dozen cupcakes to be make. What is the cost minimizing production plan for 25 dozen cupcakes? (Hint: Find the cost minimizing l and g such that dq = 25.) How much will this cost?
Grease Tech produces oil changes. The production of oil changes reles on both capital (K) and labor (L) and is combined in the following production function F (K, L) = KILL Take the derivative of this production function with respect to capital. What is the marginal product of capital evaluated at (le. just plug in the numbers) 64 units of capital used and 16 units of labor?
Economics: Industrial Economics 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). Now assume that the firm operates under monopoly and the inverse demand function is p = 115 - 2 q Use the solution to the cost minimization problem to solve the profit maximization problem of this firm. Determine this firm's price p*. Please Show your Work. a. 55 b. 75 c. 85 d. 65 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…
QUESTION THREE: PRODUCER THEORY 1. Suppose the production function for automobiles is given by q = kl - 0.8k² - 0.21² where q represents the annual quantity of bicycles produced, k represents annual capital input, and I represents annual labor input. a) Suppose k=10; graph the total and average productivity of labor curves. At what level of labor input does this average productivity reach a maximum? How many cars are produced at that point? b) Again, assuming k=10, graph the MP curve. At what level of labor input does MP₁ = 0 c) Suppose capital inputs were increased to k-20. How would your answer to parts (a) and (b) change? d) Does the production of automobiles exhibit constant, increasing, or decreasing returns to scale? 2. Supposing that the firm in (1) is a competitive firm and its production function is y = 10 + (x - 1,000)¹/3. The price of the input x is w = 1. (a) Show that the firm's total cost curve is C(y) = 1,000 + (-10)³. (b) Show that the minimum of the marginal cost curve…
6
In economics and econometrics, the Cobb-Douglas production function is a particular functional form of ne production function, widely used to represent the technological relationship between the amounts of two r more inputs (particularly physical capital and labor) and the amount of output that can be produced by nose inputs. The function they used to model production is defined by, P(L, K) = 6LªK!-a where P is the total production (the monetary value of all goods produced in a year), L is the amount f labor (the total number of person-hours worked in a year), and K is the amount of capital invested (the onetary worth of all machinery, equipment, and buildings). Its domain is {(L, k)|L > 0, K > 0} because L nd K represent labor and capital and are therefore never negative. Show that the Cobb-Douglas production function can be written as P P(L, K) = 6LªK1-a → In K L In b+ a ln K
Answer the Constrained Optimization: Cobb-Douglas Production Function:3. Solve for the formulas of the Marginal Product of Labor (MPL), and Marginal product of Capital (MPK)4. Using your knowledge of the tangency condition in Producer’s theory, find the combination of K and L that the firm should use to produce the maximum possible output. Do not solve the problem using the Lagrangian method.Note: The tangency conditions just states that the slope of the production function must beequal to the slope of the isocost function.5. What is the maximum possible output that the firm could earn given the constraint it faces
In the following graph, the price of capital is $100 per unit; the price of labor is $25 per unit. How much does the seventh unit of output add to total cost? Units of capital 100 64 40 24 64 nothing $400 $800 $4,000 $8,000 C 144 120 160 Q-10 Q-20 280 Units of labor Q-30 400
Production Function. Consider the Cobb-Douglas production function discussed in class:F(K, L) = AK^1/3 L^2/3. Suppose that parameters are initially A = 1, K = 150, and L = 10. d) Suppose that the quantity of labor L doubles. Calculate Y, w, r, Y/L, and K/L. Com-ment on how and why these numbers changed relative to (c) and why they did so. E) Suppose that the quantity of capital K doubles as well. (So now both K and L aretwice their previous value). Calculate Y, w, r, Y/L, and K/L. Comment on how thesenumbers changed relative to both their initial values, and their values in (d).

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

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

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

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

SEE MORE TEXTBOOKS