4. 2.4 from Microeconomic AnalysisLet f(r1, 2) be a production function with two factors and let wi and wa be their respectiveprices. Show that the elasticity of the factor share (wr2/wx1) with respect to (21/a2) isgiven by 1/o – 1

Given:- f(x1, x2)=Production function w1 and w2=Prices Please find the image attached for detailed…

Let f(r1,22) be a production function with two factors and let wy and wz be their respective prices. Show that the elasticity of the factor share (w2r2/wix1) with respect to (21/x2) is given by 1/o -1

Let f(r1,22) be a production function with two factors and let wy and wz be their respective prices. Show that the elasticity of the factor share (w2r2/wix1) with respect to (21/x2) is given by 1/o -1

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

Please fast solve the issue
Problem 2. (SW 12.8.) Consider a product market with a supply function Q₁ =B₁ + B₁P₁ + už, a demand function Q 7o+u, and an equilibrium condition Q = Q, where u and u are mutually independent i.i.d. random variables, both with a mean of 0. = (a) Show that P; and us are correlated. (b) Show that the OLS estimator of 3₁ is inconsistent. Hint: The standard strategy for showing inconsistency: first, argue that ₁ will Var(P) converge in large samples to Co(P), second, use OLS calculations to show that Cov(Q³,P) # B₁. Var(P) (c) How would you estimate Bo, B₁, and %0?
Thranduil company’s market research department is working on the pricing of a product. The field research shows that average demand is expected to be 8000 units at price 50 TL. From this point, each 1 TL change in price will negatively affect demand with a magnitude of 100 units. Fixed and variable costs are confronted for producing the product. According to the information obtained from the financial department, 200,000 TL is the estimate of fixed costs and 20 TL is the estimate of variable costs per unit produced. Assume that all units produced are sold.Which of the following prices is the one that maximizes the company's profit?
please solve it as soon as possible
Marryweather Ltd. is a company that sells machines in the US and the EU. The inverse demand functions for the two markets are given as Pus = 10 – Yus and pgu = 6 - Yev. respectively. The machines for both markets are manufactured in Poland with a fixed % marginal cost of $2 and sold to clients only through its online retail stores (assume the online stores are affiliates of the company and that the profits are directly recorded by Marryweather, Ltd.). Due to its unique patented technology, the company is a monopoly in both markets. 1. Assume, instead of the exclusive territorial agreements, Marryweather, Ltd. has one global retail agreement with its online vendor that sells to both markets. Drawing a diagram (with the proper labels) show the combined market demand and marginal revenue. What is the price? What is the total profit? How many machines does the company sell in each market? 2. If Marryweather, Ltd. could perfectly price discriminate in the combined market from part (b), what…
1) The Cobb-Douglas production function is y = 22, with a > 0 and 3 > 0. Show that MP₁ = ay/2₁, MP₂ = By/22. What is the MRT S21? How does it vary with: (a) y:; (b) 22/21-
A company manufactures two products. If it charges price p1 for product 1 and price p2 for product 2, it can sell quantities q1 = 55 − 3p1 + 2p2 and q2 = 75 + 2p1 − 2p2 for products 1 and 2, respectively. It costs the company $20 to produce a unit of product 1 and $65 to produce a unit of product 2. Suppose the company must produce a minimum of 20 units of each product. What prices should it charge for product 2 to maximize profit?
say the managers of the dinner restaurant (previously mentioned) decided to implement the new strategy of targeting higher-income consumers. Suppose that the quality improvements associated with this strategy change will increase the variable costs for the average entrée from $2.50 to $4.50 and that the price change associated with this strategy will raise the price of the average entrée from $8.00 to $13.0O. If the base sales level for the restaurant is 400 entrées per week, then the breakeven level of entrée sales that the manager should be considering is: Select one: O a. 141 entrées per week O b. -200 entrées per week O c. -141 entrées per week O d. 200 entrées per week
Edinburgh Tyre Company (ETC) sells identical tyres under the firm's own brand name and private label tyres to discount stores. The tyres sold in both sub-markets are identical, and the marginal cost is constant at £10 per tyre for both types. The firm has estimated the following demand curves for each of the markets. PB 70 0.0005QB (brand name) and PP 20-0.0002QP (private label). Quantities are measured in thousands per month and price refers to the wholesale price in pounds. ETC currently sells brand name tyres at a wholesale price of £28.50 and private label tyres at a wholesale price of £14. Which of the following statements is true? Select one: O a. O b. ○ c. The brand name price is too low and the private label price too high relative to the profit maximising prices. Both prices are too high relative to the profit maximising prices. Both prices are too low relative to the profit maximising prices. Od. The brand name price is too high and the private label price too low relative to…
c) Instead of introducing the 20% corporate tax in part (b), the government decided to add an ad valorem input tax of 100% to input 2. What is the profit-maximizing amount of each input to use? What is the profit-maximizing output? How much is Rodrigo’s new profit?
Cloud Cafe is considering the sale of promotional mugs. It can have the mugs produced by one of two suppliers. Supplier A will charge them a setup fee of Php13000 plus Php40 for each mug; Supplier B has no setup fee and will charge Php60 per mug. The company estimates its demand for mugs to be given by Q=32000-400P, where P is the price in Philippine peso and Q is the number of mugs (hint: the price equation is P=80-0.0025Q). In order to make sound decisions, the company's management asked the assistance of their student trainees from FEU in assessing the cost and revenue implications of the promotional campaign. 1. If the company wants to give the mugs away for free, how many mugs should it order? 2. What is the company's marginal cost if Supplier A is chosen? 3. What is the company's marginal cost if supplier B is chosen? 4. If the company seeks to maximize profit from selling mugs and Supplier A is chosen, how many mugs should the company order? 5. If the company seeks to maximize…
Marryweather Ltd. is a company that sells machines in the US and the EU. The inverse Pus = 10 – Yus and pgu = 6 – YEu, demand functions for the two markets are given as respectively. The machines for both markets are manufactured in Poland with a fixed % marginal cost of $2 and sold to clients only through its online retail stores (assume the online stores are affiliates of the company and that the profits are directly recorded by Marryweather, Ltd.). Due to its unique patented technology, the company is a monopoly in both markets. 1. Assuming Marryweather, Ltd. has an exclusive territorial online retail agreement in each market with its vendors (an online vendor in the US cannot sell to an address in Europe, and vice versa), what would be the profit-maximizing prices and quantities in the US and the EU? What are the profits from each market? 2. Assume, instead of the exclusive territorial agreements, Marryweather, Ltd. has one global retail agreement with its online vendor that sells…