Economics (6th Edition)
6th Edition
ISBN: 9780134105840
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 11, Problem 11.6.12PA
To determine
Diseconomies of scale versus diminishing returns.
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Exercise 6
Imagine that you head production of a multinational food processing company. The ongoing uncer-
tainty about costs means that you are unsure of the future cost of one of your inputs, x2. Your firm's
production function is
y = f(x1, x2) = x²x²²
The output price p is 1000, x1 = 27, and wx₁ = 60.
1. Suppose the current input price is Wx2
=
50. Solve for the optimal choice of x2.
2. Now suppose that the probability the input price remains 50 is 0.65 and the probability that
Wx2
60 is 0.35. Solve for the optimal choice of x2. Round down to the nearest integer.
=
3. Finally, suppose the costs do actually rise, i.e., Wx2 = 60. Calculate the difference in profit from
the uncertainty in (2) vs. the certainty in (1).
Not use ai please let
Chapter 11 Solutions
Economics (6th Edition)
Ch. 11.A - Prob. 1RQCh. 11.A - Prob. 2RQCh. 11.A - Prob. 3RQCh. 11.A - Prob. 4PACh. 11.A - Prob. 5PACh. 11.A - Prob. 6PACh. 11.A - Prob. 7PACh. 11.A - Prob. 8PACh. 11.A - Prob. 9PACh. 11.A - Prob. 10PA
Ch. 11.A - Prob. 11PACh. 11.A - Prob. 12PACh. 11.A - Prob. 13PACh. 11.A - Prob. 14PACh. 11.A - Prob. 15PACh. 11 - Prob. 11.1.1RQCh. 11 - Prob. 11.1.2RQCh. 11 - Prob. 11.1.3PACh. 11 - Prob. 11.1.4PACh. 11 - Prob. 11.1.5PACh. 11 - Prob. 11.2.1RQCh. 11 - Prob. 11.2.2RQCh. 11 - Prob. 11.2.3RQCh. 11 - Prob. 11.2.4RQCh. 11 - Prob. 11.2.5PACh. 11 - Prob. 11.2.6PACh. 11 - Prob. 11.2.7PACh. 11 - Prob. 11.2.8PACh. 11 - Prob. 11.2.9PACh. 11 - Prob. 11.2.10PACh. 11 - Prob. 11.2.11PACh. 11 - Prob. 11.2.12PACh. 11 - Prob. 11.3.1RQCh. 11 - Prob. 11.3.2RQCh. 11 - Prob. 11.3.3RQCh. 11 - Prob. 11.3.4PACh. 11 - Prob. 11.3.5PACh. 11 - Prob. 11.3.6PACh. 11 - Prob. 11.3.7PACh. 11 - Prob. 11.3.8PACh. 11 - Prob. 11.3.9PACh. 11 - Prob. 11.3.10PACh. 11 - Prob. 11.4.1RQCh. 11 - Prob. 11.4.2RQCh. 11 - Prob. 11.4.3RQCh. 11 - Prob. 11.4.4PACh. 11 - Prob. 11.4.5PACh. 11 - Prob. 11.4.6PACh. 11 - Prob. 11.4.7PACh. 11 - Prob. 11.4.8PACh. 11 - Prob. 11.4.9PACh. 11 - Prob. 11.4.10PACh. 11 - Prob. 11.5.1RQCh. 11 - Prob. 11.5.2RQCh. 11 - Prob. 11.5.3PACh. 11 - Prob. 11.5.4PACh. 11 - Prob. 11.5.5PACh. 11 - Prob. 11.5.6PACh. 11 - Prob. 11.5.7PACh. 11 - Prob. 11.5.8PACh. 11 - Prob. 11.5.9PACh. 11 - Prob. 11.6.1RQCh. 11 - Prob. 11.6.2RQCh. 11 - Prob. 11.6.3RQCh. 11 - Prob. 11.6.4RQCh. 11 - Prob. 11.6.5RQCh. 11 - Prob. 11.6.6PACh. 11 - Prob. 11.6.7PACh. 11 - Prob. 11.6.8PACh. 11 - Prob. 11.6.9PACh. 11 - Prob. 11.6.10PACh. 11 - Prob. 11.6.11PACh. 11 - Prob. 11.6.12PACh. 11 - Prob. 11.6.13PA
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