Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter B, Problem 6E
a.
To determine
To evaluate the marginal revenue and marginal cost functions by using the
b.
To determine
To evaluate theMarginal revenue equals marginal cost and the economic principle that profits are maximized at the output level where marginal revenue equals marginal cost is illustrated.
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Given the input-output matrix below, find the output matrix if final demand changes to 500 for water, 180 for electric power, and 800 for agriculture.
Industry
Electric
Power
Industry:
Water
Electric Power
Agriculture
Other
Water
200
100
300
400
The output matrix is X=
(Round to two decimal places as needed.)
480
120
240
360
Agriculture Final Demand
180
240
120
60
290
140
600
Question 2: For this problem you will analyze the elasticity of substitution and the
isoquant graphs for two different production functions
F₁(K, L) = 4K + 2L
F₂(K, L) = K²/³ [1/3
(a) Graph the isoquant for F₁(K, L)
=
4K+2L that represents an output of 8. Be
sure to show your work and label the axes clearly
(b) What is the marginal rate of technical substitution (MRTS) for F₁ ?
(c) What is the elasticity of substitution for F₁ ? /
What quantity would maximize profits?
Chapter B Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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