Suppose the lease for cubicles is under a long-term contract and the firm already chose how many cubicles to lease. Suppose specificallythat the firm is leasing 5 cubicles. The firm, however, must decide how many employees to hire for its projects.Let P stand for the price of output produced by the firm and let w₁ stand for the cost per employee. Which of the following functionsrepresents the firm's demand function for employees?Choose one:О А.1.14=Pw1x-2.94O B.x = (zWIPx-2.941.14-2.94P=w₁x1.14O D.D. = (Px1.14)O E. 3الفx= Px1.14.-2.94-2.94

Answered: Image /qna-images/answer/3985c8f7-d455-405b-b693-3728cbc52274.jpg

Answered: Suppose the lease for cubicles is under…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.9P

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Tom Petersen is considering renovating bar stools at Dreamland. The productionfunction for new bar stools is given byq= 0.5L0.5where q is the number of stools produced during the renovation week and l represents thea number of worker hours employed during the period. The firm is a price taker for both bar stools(which sell for P) and workers (which can be hired at a wage rate of w per hour).a. What is the cost function for this firm C(w,q)?b. What is the supply function for bar stools q(P,w)?c. What is the profit function for this firm (P,w)?d. What is the firm’s demand function for labor function L(P,w)?
Suppose Firm A has a budget of P1.5 million pesos in outsourcing inputs, labor and machines, that would lend support in its 1-year operation. Suppose further that the cost of labor for 1 year is P150,000 and for a machine is P200,000. If it decides to hire 6 laborers, how many machines would it accept? Analysis [7 pages] Based on the above activity: 1. How would a firm decide on what combination of inputs it would hire? 2. What is/are the basis of the firm in selecting the number of its inputs? 3. Do you think the above combination of inputs would let Firm A to gain a maximum profit? Why or why not?
Maximizing profit with isoprofit curvesSuppose that you are starting up a lawn-raking business. All of your workers are required to supply their own rakes, so the only cost to you is hiring labor at an hourly rate. Suppose that the market price of raking someone's yard is $24 per lawn and the hourly wage is $18 per hour. The following graph shows the production function (PF) for your business.
True or false and explain Suppose a firm’s marginal product of labour is MPL = 10/L, where L is measured in labour hours, the price of the product is $600, and the cost per hour of labour is $30. The firm currently employs 150 labour hours. In order to maximize the firm’s profits in the short run, the manager should increase its labour employment by 40 labour hours.
6s
Roland Umbrellas has a production function given by Q = L0.5K0.5. The wage (W) is $80 per day and the rental per unit of capital (R) is $5 per day. In the long run, how many units of capital will Roland want to buy for each unit of labor?
Tripod Store has been so successful in Paris that it wants to set up a new operation in Nantes. Their long-run production func tion is Q = K2/3L1/3 The rental rate of capital is $12 and the wage is $10. The market price of cameras is $6, and Tripod expects to sell 1000 per month. a. What is the opti mal allocation of capital and labor (per month) for the new loc ation? b. In add ition to the price of labor and capital, Tripod will have to pay $8000 per month in fixed costs—rent, insurance, etc. Does this change your answer to part (A) above?
6. Each of the 10 firms has the production function q = √KL. The wage is 5 and the rent on capital is 10. Assume we are in the long run, so firms can vary both factors. Write an expression for one firm's cost minimization problem. Use whichever method you prefer to minimize cost and derive an expression for one firm's total cost: TC (9₁) c. Compute one firm's marginal cost and derive the inverse supply curve for one firm and the inverse supply curve for the market. What is the elasticity of supply? a. b.
5. Suppose that a firm is producing in the short run with output given by:Q = 10L – 0.25L2, where L is the labour input. The firm hires labour at wage of €16per hour and sells the good in a competitive market at P = €8 per unit.a) Determine the firm’s marginal product of labour.b) Find the firm’s optimal use of labour, the associated level of output and the marginalproduct of labour at this employment level. Explain the meaning of the latter.c) Management of the firm has carefully measured output elasticity in the past three yearsand has determined that it is 1.2. What sort of returns to scale does the firm face?Interpret this number in one sentence.
A competitive, profit-maximizing firm uses two inputs labor (L) and capital (K). Its production function is given by f (L, K) = 3L2 + 7K 2. Its output sells for $4 per unit. The price of labor is $6 per hour. The price of output rises to $8 per unit but factor prices do not change. (a) It will increase its hiring of labor by 4 hours. (b) It will increase its hiring of labor by 2 hours. (c) We need to know the price of capital to be able to determine the change in demand for labor. (d) It will increase its hiring of labor by 3 hours. (e) None of the above.
Please type the answer, and answer both questions.
A5

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