Consider a firm that produces output 8 4 F(K, L) 17K17 L17 = 15 when using K units of capital and I units of labor. It sells each unit produced for p dollars, paying r = 1.6 dollars for each unit of capital, and w = 0.6 dollars for each unit of labor How much capital and how much labor must this firm hire in order to maximize its profits Use second-order conditions to ensure that a maximum is indeed being found Is it a global maximum or only a local one?

Consider a firm that produces output 8 4 F(K, L) 17K17 L17 = 15 when using K units of capital and I units of labor. It sells each unit produced for p dollars, paying r = 1.6 dollars for each unit of capital, and w = 0.6 dollars for each unit of labor How much capital and how much labor must this firm hire in order to maximize its profits Use second-order conditions to ensure that a maximum is indeed being found Is it a global maximum or only a local one?

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

Consider a competitive firm whose Cobb-Douglas production function is f (x1, x2) where x1 denotes the amount of labor and x2 denotes the amount of capital. Suppose that the amount of capital is fixed in the short run at 2 = 100. Let the hourly wage rate be wi = $20, the capital rental rate w2 = $30 and the price of the firm's product p = $100. (a) Are the returns to scale increasing, constant or decreasing? Explain you assertion. (b) What is the short-run marginal cost function? (c) What is the average variable cost function of this firm? (d) What is the short-run output of this firm? (e) Will the firm continue to operate in the long run? Explain your assertion.
10
A company is currently using its two inputs L and K, where MPL - 3.2K04L 02 and MPK - 1.6K -0.6 0.8 The firm pays a wage (W) of $80 per L and pays a rental rate of capital (R) of $40 per K. unit(s) of K for every The optimal (cost minimizing) combination of labor and capital is to employ unit of L (K should be times L). Answer as a whole number.
Consider Delta, a price-taking single-output, single input firm with the following production function:f (z) = z4/5a) Define non decreasing returns to scale and non-increasing returns to scale in terms of the production function and give conditions under which f(z) satisfies these properties. b) Suppose that the price of the input z is ѿ =1. Set up the cost minimization problem and solve for the conditional factor demand correspondence and the cost function. c) Set up Delta's profit maximization problem using the cost function you derived in (b) above and solve for the supply correspondence and the profit function.
A5
An employer who employs m workers determines that they produce: units of that product daily. Total income (in dollars) is given by: 1) ¿What is the price, per unit, when there are 30 workers? 2) Determine the marginal revenue when there are 30 workers. 3) The product of marginal income corresponds to the rate of change of income with respect to the number of active employees, at a given moment. Determine the product of marginal revenue when m = 30
Which of the following production function exhibits Diseconomies of Scale? Production function where inputs are perfect complements Q = K¹/2 L1/3 OQ=K¹/2 L1¹/2 Production function where inputs are perfect substitutes
Assume a firm has the following short-run production function: q(L) = L+6L2-1/2L3 If this firm is going to maximize profits in the short-run by producing a strictly positive level of output (q>0), what is the lowest level of labor (L) they would employ? A.) Minimum L=?
Please answer in detail according to the picture. Show that the cost function is homogeneous of degree 1/(α+β) in output. How do the returns to scale (degree of homogeneity of the production function) relate to the propertiesof the cost function? Does this make sense to you? Explain clearly why.
A competitive firm’s production function is given by y= f(x1,x2)=x1ax2b If a=b=0.5 , the price of factor 1 is 12, and the price of factor 2 is 3, find the cost minimizing input combinations and the total cost of producing 40 units of output. Redo part (1), this time by first deriving the firm’s conditional factor demand functions and the cost function.
A firm uses inputs L and K to produce output Q and the production function is Q = 5LK. The firm is currently using inputs L = 6 and K = 8. If the firm reduces its capital purchase to only 2 units, how much additional K must it purchase to keep output constant? Group of answer choices 12 14 16 18
Consider a production function Q = (K1/2) + (L1/2) + (M1/2) where L, K, M represent labor, capital, and material. Input prices for L, K, M are 1, 1, and 1. The firm wants to produce 12 units of output. a) What is the total cost if K = 4? b) What is the total cost if K = 4 and L = 9?