ENGR.ECONOMIC ANALYSIS
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ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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If the production function is F(K,L)=A∗K0.4L0.6 then what is the
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- Hi, please help with the questionarrow_forwardJuan Valdez owns a coffee farm in Colombia. His production function is: f(x1,x2)=(x1−1)^0.25 x2^0.5 Assume the price of input 1 is r and the price of input 2 is w. (a) Write down an expression for the technical rate of substitution. (b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce. (c) Find Juan's cost function. (d) What is the supply function of Juan's firm?arrow_forwardCheburashka uses kiwi fruits (K) and labour (L) to produce juice (q). His production function is: q=min{L/3, K0.5}, where labour is measured in hours, kiwi fruits in kg, and juice in (large) bottles. For example, if he uses 4 kg of kiwi fruits and 6 hours of labour, he can produce 2 bottles of juice. a) Draw isoquants for q = 1, q = 2 and q = 3 on a graph with labour on the horizontal axis and kiwi fruits on the vertical one. = $5 per kg. b) Let the price of labour-hour be given by w = $18 and the price of fruit by p What is the optimal amount of labour and fruit to produce q bottles of juice if Cheburashka strives to minimise costs? (Note that you need to provide expressions L(q) and K(q)). Illustrate on the graph from a) by drawing corresponding isocost lines. c) Draw the Cheburashka's expansion path on a graph from a). Derive an expression for the expansion path, i.e., K as a function of L. How does it depend on the wage and the price of kiwi?arrow_forward
- Consider the production function q=√L+8K^(3). Starting from the input combination (3,6), does the production function exhibit increasing, constant or decreasing returns to scale if inputs double?arrow_forwardConsider the following production function when K is fixed. (This is a description of the figure: it shows a two-axis graph; in the horizontal axis we measure labor and in the vertical axis we measure meals; the graph of the production function is a line that intersects the vertical axis at a positive amount; this graph is a line with positive slope and passes through the point (4,300)). Can we say that the production function satisfies the law of decreasing marginal returns of labor?True Falsearrow_forwardThe marginal product of labour is diminishing when: The marginal product of labour is larger than the average product of labour. The production function is convex. The production function is concave. The second derivative of the production function is negative.arrow_forward
- Suppose the production function for T-shirts can be represented as q = L0.25 K0.75. Show that the production function has constant returns to scale.arrow_forwardFor the production function Qs = K0.4L0.1 find the returns to scale, recall that a doubling of inputs that doulbes output is a CONSTANT returns to scale = 1.0 Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g. 1.15 = 1.2, 1.14 = 1.1).arrow_forwardPlease help solve for (b) what is long run cost in a?arrow_forward
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