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Profit Functions Let the technology for producing golly-wompers be given by q L0.3K0.6. Assume the producers...
1. Let the market demand curve be P=1000 - 10Q. Assume the market is controlled by...
1. Let the market demand curve be P=1000 - 10Q. Assume the market is controlled by a monopolist. Let fixed cost be $10,000 and Marginal Costs (MC)=20Q. a) What is the profit maximizing output? b) What is the monopolist's total revenue at the profit maximizing output? c) How much profit is the monopolist earning? d) Assume the government breaks up the monopolist in order to create a perfectly competitive market of identical firms. Assume the MC curve is now the...
Competitive Firms - Optimal Labor and Capital 1. A competitive firm has production technology q A...
Competitive Firms - Optimal Labor and Capital
1. A competitive firm has production technology q A K La. lt can sell output at price P and hire capital and labor at competitive factor prices r and w. Write down the firm's profit maximization problem. What are the firm's first- order necessary conditions for a maximum. a. w Suppose now that α-,P-1 and -1. b. What is the firm's optimum capital labor-intensity? Why can't the optimum scale of production q be...
10. Consider the production function: f(KL)=K L. Let wandr denote the price of labor and capital,...
10. Consider the production function: f(KL)=K L. Let wandr denote the price of labor and capital, and let p denote the price of the output good. (a) Find the cost minimizing input bundle and the cost function as a function of w., and q. (b) Find the profit maximizing output level and the profit as a function of w, r, and p. 11. Consider the production function: f(KL)=K+L. Let w and r denote the price of labor and capital, and...
Draw a diagram below that shows the short run profit maximizing output for a competitive firm...
Draw a diagram below that shows the short run profit maximizing output for a competitive firm at a market price of S10 producing an output of 20 that leads to a profit of $40. 4. 5. If SMC-20+2Q, AVC-1.5Q, P $100. a. Find Q b. This perfectly competitive firm will break-even if fixed cost equal how much?
Help with #6 and 7 please 6. Assume XYZ Corporation is producing 20 units of output....
Help with #6 and 7 please
6. Assume XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation: A. Should close down in the short run. B. Is maximizing its profits. C. Is realizing a loss of $60. D. Is realizing an economic profit of $40. 7. In...
Consider a competitive rm with total costs given by TC(q) = 100 + 10q + q^2,...
Consider a competitive rm with total costs given by TC(q) = 100 + 10q + q^2, The firm faces a market price p = 50. (a) Write expressions for total revenue TR and marginal revenue MR as functions of output q. (b) Write expressions for average total cost ATC, average variable cost AVC, and marginal cost MC as functions of output q. (c) For what value of output is ATC minimized? (d) Find the profit maximizing level of output q...
Davy Metal Company has a new production technology for producing brass fittings and they have hired...
Davy Metal Company has a new production technology for producing brass fittings and they have hired you to conduct an economic analysis. Davy's engineers estimated the following production function:q=2K/ where a measures the daily output of brass fittings in bundles, K measures the number of robotic assembly lines in operation on a given day and measures labor usage in hours of labor per day. Note: MPL= and MPK=2/1. The number of assembly lines in operation is fixed in the short...
If a firm operating in a perfectly competitive industry maximizes short-run profits by producing some quantity...
If a firm operating in a perfectly competitive industry maximizes short-run profits by producing some quantity of output q* > 0, which of the following must be true at that level of output? A) p > MC B) MR > MC C) p ≥ AVC D) All of the above E) B and C only
(c) Consider a competitive producer with a production function of l0.4k0.1 , labor price of w...
(c) Consider a competitive producer with a production function of l0.4k0.1 , labor price of w and capital price of 1(not v, the number one), and an output price of p. Suppose capital in the short run is fixed at k. Given: Short Run Cost Function (C): C = k + w(q2.5/k0.25) Profit Maximizing Quantity (q): q = (w /4k0.25p)1/0.75 Question: Find the firm’s unconditional demand for labor?
2. In the local cabbage market, there are 5,000 producers that have identical short-run cost functions. They are: where...
2. In the local cabbage market, there are 5,000 producers that have identical short-run cost functions. They are: where q is the number of bushels produced each period. Out of the fixed cost, 50% is sunk and 50% is non-sunk. The short-run marginal cost function for each producer is: MC(q) = 0.05q. (3*2.5 = 7.5) a) If the local cabbage market is perfectly competitive, what is each cabbage producer's short-run supply curve? Derive the local market supply curve of cabbage....
Competitive Firms - Optimal Labor and Capital
1. A competitive firm has production technology q A K La. lt can sell output at price P and hire capital and labor at competitive factor prices r and w. Write down the firm's profit maximization problem. What are the firm's first- order necessary conditions for a maximum. a. w Suppose now that α-,P-1 and -1. b. What is the firm's optimum capital labor-intensity? Why can't the optimum scale of production q be...
10. Consider the production function: f(KL)=K L. Let wandr denote the price of labor and capital, and let p denote the price of the output good. (a) Find the cost minimizing input bundle and the cost function as a function of w., and q. (b) Find the profit maximizing output level and the profit as a function of w, r, and p. 11. Consider the production function: f(KL)=K+L. Let w and r denote the price of labor and capital, and...
Draw a diagram below that shows the short run profit maximizing output for a competitive firm at a market price of S10 producing an output of 20 that leads to a profit of $40. 4. 5. If SMC-20+2Q, AVC-1.5Q, P $100. a. Find Q b. This perfectly competitive firm will break-even if fixed cost equal how much?
Help with #6 and 7 please
6. Assume XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation: A. Should close down in the short run. B. Is maximizing its profits. C. Is realizing a loss of $60. D. Is realizing an economic profit of $40. 7. In...
Davy Metal Company has a new production technology for producing brass fittings and they have hired you to conduct an economic analysis. Davy's engineers estimated the following production function:q=2K/ where a measures the daily output of brass fittings in bundles, K measures the number of robotic assembly lines in operation on a given day and measures labor usage in hours of labor per day. Note: MPL= and MPK=2/1. The number of assembly lines in operation is fixed in the short...
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