Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134643175
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 14, Problem 10E
(a)
To determine
Profit maximizing quantity of L.
(b)
To determine
Profit maximizing quantity of q.
(c)
To determine
Maximum profit.
(d)
To determine
Profit maximizing quantity of L, q, profit after tax in output, and subsidy of wages.
(e)
To determine
Profit maximizing quantity of L, q, profit after tax in output, and subsidy of wages.
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6.
10. A firm uses a single input, labor, to produce output qaccording to the production function
q8√ The commodity sells for $150 per unit and the wage rate is $75 per hour.
Find the profit-maximizing quantity of L.
Find the profit-maximizing quantity of q.
What is the maximum profit?
a.
b.
C.
d.
Suppose now that the firm is taxed $30 per unit of output and that the wage
rate is subsidized at a rate of $15 per hour. Assume that the firm is a price taker,
so the price of the product remains at $150. Find the new profit-maximizing levels
of L, q, and profit.
A firm uses a production function of the form Y=z*K^0.33*Nd^0.67 and chooses labor input Nd to maximize profits taking the wage rate w that it pays per unit of labor as given. First, write down the profit function of the firm. Assume z=10, K=100, and wage w = $20. The government now introduces a wage subsidy to help out the firm. The wage subsidy s = $4 per unit of work. Given this subsidy solve for the new optimal output level of the firm. Y* =
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Chapter 14 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (9th Edition) (Pearson Series in Economics)
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