You hired a mathematician (who never took a Natural Resource Economics class) to solvea 4 period nonrenewable resource problem assuming a competitive industry and a totalresource constraint of 100. He returns an answer to you where per period output levelsare increasing and he gets a lambda value: 1 = -3.45. From this you conclude:Demand is too low for the constraint of 100 to be binding. Therefore there is no scarcity.The mathematician must have made a mathematical mistake.Competitive firms place no weight on the future and therefore behave like there is noopportunity cost of extracting a resource today.Demand is too high to support the extraction of the resource so the marginal user cost becomenegative.

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Answered: You hired a mathematician (who never…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given the input-output matrix below, find the output matrix if final demand changes to 600 for water, 130 for electric power, and 700 for agriculture. The output matrix is x = (Round to two decimal places as needed.) Given the input-output matrix below, find the output matrix if final demand changes to 600 for water, 130 for electric power, and 700 for agriculture. Industry Electric Water Power Agriculture Final Demand Water 160 300 200 Industry: Electric Power 80 120 300 Agriculture 240 60 200 Other 320 120 300 22201 400 The output matrix is X= (Round to two decimal places as needed.)
Kwami and Adzga quit their jobs and decided to start a piggery joint venture business. The company processes and packs pork for sale. The output from this firm is described by the Cobb-Douglas production function, q=K¹/² A¹/2 Where q is the number of pigs processed in a quarter, K is the number of hours invested by Kwami in a quarter, and A is the number of hours invested by Adzoa in a quarter. Kwami and Adzoa value 1 hour of their time at $12 and $3 respectively based on what each was earning before quitting their jobs. a) Obtain the number of hours that Adzoa needs to invest (as a function of q and K) for 150 pigs to be processed in a quarter b) How many hours should Adzoa invest for 150 pigs to be processed in a quarter if it is known that Kwami invested 750 hours? c) The cost function for this company may be written as, C= vK + WA where v and w are unit costs for Kwami and Adzoa. wwwwwwww www Substituting for v and w gives C= 12K + 3A Express this cost of production function as a…
Given the following functions for shoe factory in Ohio: fi: Qa=2(90-P) 1 P==Qs 4 Where Q is quantity and P is price. fz given is the Marginal Cost for the shoe factory but this producer often dumps left over materials such as glues and dyes directly into the sewer effecting ground water in the nearby town. An expert in the field discovered that the marginal damage is a constant $9. 1. What is the social marginal cost (show all working)? 2. What is the new equilibrium when pollution damage is taken into consideration for this market? 3. What is the total surplus when accounting for the damages? (Evaluate at the SMC level) - Draw the diagram and label. 4. What is the Deadweight loss for the pollution in the event that the producers do not pay for the damages? (Identify the DWL on your diagram) 5. What is the Total Social Surplus taking damages into account?
For firm A, is the following an internal or external economy of scale? Firm A benefits from lower administration costs per unit as a result of opening a second factory.
Making dresses is a labor-intensive process. Indeed, the production function of a dressmaking firm is well described by the equation Q = L − L2∕800, where Q denotes the number of dresses per week and L is the number of labor hours per week. The firm’s additional cost of hiring an extra hour of labor is about $20 per hour (wage plus fringe benefits). The firm faces the fixed selling price, P = $40. Over the next two years, labor costs are expected to be unchanged, but dress prices are expected to increase to $50. What effect will this have on the firm’s optimal output? A- Increase B- Decrease C- No Effect
The Cobb-Douglas production function can be shown to be a special case of a larger class of linear homogeneous production functions having the following mathematical form: Q=γ[δK−ρ+(1 - δ)L−ρ]−ν/ρ�=�[δK−ρ+(1 - δ)�−ρ]−ν/ρ where γ is an efficiency parameter that shows the output resulting from given quantities of inputs; δ is a distribution parameter (0 ≤ δ ≤ 1) that indicates the division of factor income between capital and labor; ρ is a substitution parameter that is a measure of substitutability of capital for labor (or vice versa) in the production process; and ν is a scale parameter (ν > 0) that indicates the type of returns to scale (increasing, constant, or decreasing). Complete the following derivation to show that when ν = 1, this function exhibits constant returns to scale. First of all, if ν = 1: Q� = = γ[δK−ρ+(1 - δ)L−ρ]−1/ρ�[δK−ρ+(1 - δ)�−ρ]−1/ρ = = γ[δK−ρ(−1/ρ)+(1 - δ)L−ρ(−1/ρ)]�[δK−ρ(−1/ρ)+(1 - δ)�−ρ(−1/ρ)] = = Then, increase the…
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Suppose you own a small business. Last month, your total revenue was $8,800. In addition, you paid $3,500 in monthly rent for office space, $300 in monthly rent for equipment, $2,500 to your workers in wages for the month, and $1,900 for the supplies you used that month. If you correctly determine that your economic profit last month was $200, then it must be true that your implicit costs are $3,600 per month. your implicit costs are $600 per month. your implicit costs are $400 per month. your implicit costs are $1,800 per month.

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