ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- X and X2 are the two factors used in production A firm's production function: fcx₁, x₂) = max {x₁, X₂} the price of X, is W₁=8, and the price of X₂ is W₂=10 The firm paproduce 100 total units of output, what is the total cost?arrow_forwardA Chinese high technology manufacturing firm has a production function of 0.80 0.20 q=16L (based on Zhang, et al., 2012). It faces prices of w=$8 and r= $2. What are its short-run average variable and marginal cost curves? Let K be fixed in the short run. The firm's short-run average variable cost curve, AVC, as a function of K and q is AVC=$ (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcute. E.g., a superscript can be created with the character.) Write AVC and MC functionsarrow_forwardA production function for a good Q uses inputs of labor (L) and capital (K) and takes the form Q=LK. The wage is equal to $20 and the rental rate of capital is equal to $80. The firm has to produce a target qo. What is the equation for the firm's long-run total cost curve?arrow_forward
- Month (m): 4 Day (d): 1 Use the two numbers above, m and d, to complete the cost function for a perfectly competitive firm: Cost (q) = m q2 + d = (30) For a cost function like yours, Marginal Cost (MC) = 2 m q . Specifically, what are the following for the cost function you wrote out above? Fixed Cost = Average Total Cost = Cost (q)/q = Variable Cost = Average Fixed Cost = FC/q = Marginal Cost = 2 m q = Average Variable Cost = VC/q = (15) Fill in the table with your values from your cost function. q Total Cost AVC AFC ATC MC 0 0 0 -- -- -- 1 2 3 4 5 6arrow_forwardimagine your firm has total cost function C = 2q3 – q2 + 40q + 60. Suppose it operates with level of production q = 9. What is your firm’s total cost?arrow_forwardAssume a firm's short-run cost function is given by the following expression: C(q) = 2+q+q2 If the firm can sell each unit of their output at a price of p=9 dollars, what is the maximum profit the firm can earn in the short-run? a.) Maximum Profit = ? dollarsarrow_forward
- Can you please help solve question 9 d and e please show full working so I can compare it to my own work Thank youarrow_forwardA firm uses labour, L and capital K, to produce a single product, X. capital is fixed but labour is variable. The firm’s production function is: X=-0.2L3 + 18L2 + 1620L. Where X is the number of units of the product per week, and L is the number of persons employed. A t what weekly output is marginal cost equal to average variable cost? if the price of the product is $0.20 per unit, what is the maximum weekly wage that the firm would pay rather than close down?arrow_forwardEconomics A firm has the production function q = K0.25L0.25 , where K is capital, L is labor, and q is output. The price of capital is v = 4 and the price of labor is w = 4. [You may need this result: if Yα = Z. Then Y = Z1/α]. (i) Derive the firm’s short-run cost function if capital is fixed at K = 16. (ii) Derive the firm’s long-run cost function. (iii) Someone claims that the firm’sarrow_forward
- a. A firm's long-run total cost can be written as LTC = 3000Q - 50Q2 + (1/3)Q3 and its long-run marginal cost by LMC = 3000 - 100Q + Q2. Find the range over which the firm will experience economies of scale. Explain your answer. b. A firm has a production function of Q = K * L + L, where the marginal product of labor is MPL = K + 1 and the marginal product of capital is MPK = L. The wage rate (W) is $100 per worker and the rental price (R) is $100 per unit of capital. In the short-run, capital (K) is fixed at 4. Find the minimum total cost of production in the short- and long-run if the firm produces 100 units of output.arrow_forwardConsider a small photography studio with 8 workers and 5 The total cost of labor and capital is $3,200. In order to reduce total operating costs, the owner leases 5 additional printers and fires 5 workers. After these changes, the salary of each worker increases by $30, the cost of using each of the printers (both new and old) remains constant, and the total cost of labor and capital decreases to $2,900. What is the cost of using one printer?arrow_forwardA5arrow_forward
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