2. Suppose the production function of a firm is given by f (x₁, x2) : = 2x1 + 4x2. (a) Calculate the conditional demand functions of the firm assuming w₁ = 2, w₂ = 3, and y = 8. (b) Calculate the minimum cost of the firm to produce 8 units of the good when w₁ = 2 and w2 = 3.

2. Suppose the production function of a firm is given by f (x₁, x2) : = 2x1 + 4x2. (a) Calculate the conditional demand functions of the firm assuming w₁ = 2, w₂ = 3, and y = 8. (b) Calculate the minimum cost of the firm to produce 8 units of the good when w₁ = 2 and w2 = 3.

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

Suppose a firm engaged in the illegal copying of DVD’s has a daily short run total cost function given by: STC = (q^2)+25 If pirated DVD’s sell for $20, how many will the firm copy each day? What will its profits be? What is the firm’s short run producer surplus at P=20? Develop a general expression for this firm’s producer surplus as a function of the price of pirated DVD’s.
1. A company has the following average income (demand) curve: P=100-0.01Q. Where Q is weekly production and P is price, measured in cents per unit. The company's cost function is given by CT = 50Q + 30,000. Suppose the firm maximizes its profits.a) What is the level of production, the price and the total profit per week?b) The government decides to impose a tax of 10 cents per unit on this product. What would the level of output, price, and profit be as a result of this? CT(Total cost)
Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) (i) Company is effectively able to price discriminate in the two markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging the same price in the two markets what are the profit maximizing levels of price, output, and the total profits? (iii) Analyze, with graphs, the two alternative pricing strategies available to the company.
7. Assume that the marginal cost curve is given by mc(q) = 100 + 2q. (a) If the price is $160, what is the optimal production for the firm? What if the price is $120? (ignore the shut-down decision for this part) (b) Assuming that the market is cleared at $160 (no shortage/surplus). If the market demand is equal to 10,000 units of the product. How many firms are currently operating (n) in the market? (Hint: if the market clears qª = n x q°) (c) If the total cost curve is TC 256 + 100g + q², what's the average total cost curve? %3| what's the break-even price? (d) If the demand curve is given by qd = 8, 452 – p, what's the long-run equilibrium price, the equilibrium quantity and the long-run total number of firms (n) in the industry?
Let's say jacky has a demand function for a product made in Ney york city given that the function D(q)=-1.15q+270, where q is the number of items in demand and D(q) is the price per item, in dollars, that can be charged when q units are sold. Say that the fixed costs of production for the item is $5,000 and variable costs are $10 per item produced. If 100 items are produced and sold, what are the finds :
Math 1
At a price of R 8 per item consumers will buy 1500 units. If the company increases the price by R1 per item, the number of items that the consumers will buy will decrease by 75. i) Does the function described represent a supply or demand curve? Find the formula of the function given that it is a linear function. ii) Find the price that will maximize the revenue.
8. Consider the following cost function: C(Q) = 20Q3 – 15Q? + 10Q. Answer the following questions: What is the range of output where this firm has economies (a) of scale. (b) cost function. You must compute the expression using the cost function given in this question. What is the measure of cost-output elasticity (Ec) for this
1 1 Consider the following cost function: c(w₁, W₂, y) = (w₁ + w₂)¹ y² (a) Find the marginal cost function, the average cost function, the supply function, and the demand function for input 1. (b) Sketch the supply curve and the demand curve for input 1. (c) What is the effect of an increase in the price of input 2 on the supply curve and the demand curve for input 1? Illustrate your answer. Solution: (excluding graphs) 1 1 дс MC = = 2 (w² + w²₁) ³y ду 1 _c_ (w² +w² )*y² _ y AC = -=-=-=- y 1 Supply: p =MC ⇒p = 2(w₁ +w₂₁) ¹y 1 1 1 = (w₁² + w²) ³ y To get demand for input 1, we use Shephard's lemma: x₁ = Cw₁ (w, y) = 4 (w^² + w² ) ² (; w₁, ²³y²) = (w ² + w² ) ² (w,₁ ²,²)
is profit maximisation seen as local minimum or maximum? Is part (b) the correct way of doing first derivative? There is image of the questions, another image of the answers of part (a) and (b).
3. A firm has a production function given by 1 1 A) y = 4x³x² ; 1 1 B) y = 3x4x² ; a) What are the factor demand functions? b) What are the conditional factor demand functions? c) What is the cost function? d) What is the supply function? 1 1 C) y = 5x³x2; 11 D) y = 12xx².
Please select all that are true regarding Minimum Efficient Scale (MES): if the quantity demanded is equal to Qmes, then the lowest cost solution is for one firm to supply the market MES is the quantity produced where average costs for a firm are at a minimum Long run average costs include fixed cost steps as quantities (scale) increase Quantities (x-axis) less than MES exhibit decreasing returns to scale due to diminishing marginal returns Short run average cost curves are for a given level of fixed cost, individually MES is the quantity demanded where total costs for a firm are at a minimum Quantities (x-axis) greater than MES exhibit decreasing returns to scale due to diminishing marginal returns Average costs do not include fixed cost since they don't change