We can generally demonstrate a relationship between scale elasticity and the slope of the average cost...
We can generally demonstrate a relationship between scale elasticity and the slope of the average cost curve. Here, we'll demonstrate the result for only one input. Consider a (continuously differentiable and strictly increasing) production function F(L), where L denotes labor. 4. (a) Letting w denote the wage rate for labor, we can note that the cost function is C = WL, where L is the amount of labor necessary to produce q units of output, i.e.so that q F(L). dc...
only number 5 Write an expression of the marginal cost function MC. Estimate the effect on TC about by 2 units decrease in from the current output level of 15 units. 5) A firm's short-run production function is given by Q = 50L -.0212 Where L denotes the number of workers. 1. Find the size of the workforce that maximizes output. 2. Find marginal product of labor (MPL) 3. Find the average product of labor (APL) 4. Find the size...
3. Assume a company that uses the production factors K and L, i.e. the production function is q = F(K,L).a) In the short run, K is constant while L is variable. An expression of the marginal cost is MC = ∆V C ∆q We also know that V C = wL if L is the only variable factor and the salary is w. This means that ∆V C = w∆L. From this information, one can get an expression of the relationship...
6) (4 points)The Longheel Press produces memo pads in its local shop. The company can rent its equipment and hire workers at competitive rates. Equipment needed for this operation can be rented at $54 per hour, and labor can be hired at $12 per worker hour. The company has allocated $96,000 for the initial run of memo pads. The production function can be expressed as: Q = 0.25K0.25L0.75, where Q represents memo pads (boxes per hour), K denotes...
1. Consider the profit maximization problem for the firm. Say the pro- duction function f(k, n) is strictly concave jointly in all arguments and once continuously differentiable (C), where k (resp, n) denotes the input of capital (resp, labor) (a) Assume a maximum exists for the firms profit maximization problem. What are the first order conditions (FOCs) to characterize all optimal solutions for factor demands for capital and labor in the general problem? (b) Say f(k, n) = (ak" +...
1. Suppose the production function is given by Q = LK, where MPL = K and MPK - L. The level of output Q = 100 and both wage and interest rates are equal to one, so that war- a) Given that the wage increases to 4. determine the elasticity of demand for labour at the new wage. Indicate whether the wage bill will increase or decrease as wage increases to 6. b) Find the linear demand function for labour...
A firm's learning curve, which shows the relationship between average cost and cumulative output (the sum of its output since the firm started producing), is AC = a + bn", where AC is its average cost; N is its cumulative output; and a, b, and r are constants. What is the firm's AC if r=0? If r= 0, then AC = a + b. (enter formula) If r= 0, what can you say about the firm's ability to learn by...
can someone help me please please Cost minimization For the production fuction is given by f(l, k) = √ l + √ k, where l is the quantity of labor and k is the quantity of capital, suppose that input prices are (w, r) >> 0, where w is the wage rate (price of a unit of labor) and r is the interest rate (price of a unit of capital). Suppose the firm must produce y > 0 units of...
can someone help me please please Cost minimization For the production fuction is given by f(l, k) = √ l + √ k, where l is the quantity of labor and k is the quantity of capital, suppose that input prices are (w, r) >> 0, where w is the wage rate (price of a unit of labor) and r is the interest rate (price of a unit of capital). Suppose the firm must produce y > 0 units of...
Can someone please help, thank you. 5. Peter Piper plans to pick pickled peppers in his latest get rich quick scheme. He plans to invest his capital in the harvest of pickled peppers and must evaluate exactly what to produce and how much variable input (labor) to employ. As a consultant for Peter Piper, use the information below to complete the analysis of Mr. Piper's production and costs. Keep in mind that the market for pickled peppers is perfectly competitive....