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Problem 1 The production function of a price-taker firm is given by F(K,L)-10*K4L3/4 Labour is fixed...
Problem 2. The firm expects that its production function in the next period will be given...
Problem 2. The firm expects that its production function in the next period will be given by Fe(K, L)-10 v KL. The firm employs 25 workers. The real interest rate equals 5% and the depreciation rate equals 20%. The price for the firm's products is 1 EUR while the price of capital goods is 10 EUR a) Find the user cost of capital. Find net investments, assuming that initially the firm has a capital stock of 88. Modify your answer...
Problem 2. The firm expects that its production function in the next period will be given...
Problem 2. The firm expects that its production function in the next period will be given by Fe (KL) 10VKL. The firm employs 25 workers. The real interest rate equals 5% and the depreciation rate equals 20%. The price for the firm's products is 1 EUR while the price of capital goods is 1O EUR Find the user cost of capital. Find net investments, assuming that initially the firm has a capital stock of 88. Modify your answer to part...
1). Suppose that a firm uses inputs labour (L, measured in person hours) and capital (K, measured in machine hours) in...
1). Suppose that a firm uses inputs labour (L, measured in person hours) and capital (K, measured in machine hours) in the production of its output (Q) according to the production function Q min{2L, 3K} (a) Draw the isoquant line associated with 12 units of output. Measure K along the vertical axis and L along the horizontal axis. (b) Suppose that the price of labour is $2/person hour, and the price of capital is $4 / person hour. What is...
12. Consider a firm with production function f(K,L) = K+L. (a) Suppose that capital level is currently fixed at K =...
12. Consider a firm with production function f(K,L) = K+L. (a) Suppose that capital level is currently fixed at K = 10. Find the short term production cost function for producing outputs greater than or equal to 10 units when w = 1 and r = 1. (b) Suppose wage goes up to w' = 2 while the price of capital remains same at r = 1. Find the new short-run cost function for producing output greater than or equal...
2 1 4. A firm has a production function of f(L,K) = L3K3. If the wage...
2 1 4. A firm has a production function of f(L,K) = L3K3. If the wage rate per labour is 10, rental rate per capital is 5, the long run cost-minimizing capital-labour ratio is: A) 4 B) 2 C) 1 D) 0.25
Consider the production function given by y = f(L,K) = L^(1/2) K^(1/3) , where y is...
Consider the production function given by y = f(L,K) = L^(1/2) K^(1/3) , where y is the output, L is the labour input, and K is the capital input. (a) Does this exhibit constant, increasing, or decreasing returns to scale? (b) Suppose that the firm employs 9 units of capital, and in the short-run, it cannot change this amount. Then what is the short-run production function? (c) Determine whether the short-run production function exhibits diminishing marginal product of labour. (d)...
11. Consider the production function: f(K,L)=K+L. Let w and r denote the price of labor and...
11. Consider the production function: f(K,L)=K+L. Let w and r 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. (b) Find the profit maximizing output level and the profit function. 12. Consider a firm with production function f(K,L) = K +L. (a) Suppose that capital level is currently fixed at K = 10. Find the short term production cost function for...
9. Suppose the firm's production function is given by f(K,L) = min (Kº,L"} (a) For what values of a will the firm e...
9. Suppose the firm's production function is given by f(K,L) = min (Kº,L"} (a) For what values of a will the firm exhibit decreasing returns to scale? Constant returns to scale? Increasing returns to scale? (b) Derive the long-run cost function and the optimal input choices. (c) Suppose the capital is fixed at K = 10,000 and a = 1. Assuming that the firm wants to produce less than 100 units, derive 10. Consider the production function: f(K,L)=KLI. Let w...
Consider a firm with production function f(K,L) = K +L. (a) Suppose that capital level is...
Consider a firm with production function f(K,L) = K +L. (a) Suppose that capital level is currently fixed at K = 10. Find the short term production cost function for producing outputs greater than or equal to 10 units when w = 1 and r=1. (b) Suppose wage goes up to w' = 2 while the price of capital remains same at r = 1. Find the new short-run cost function for producing output greater than or equal to 10...
Consider a firm whose production is given by Q(K, L) = K^1/2 L^1/2, where K and...
Consider a firm whose production is given by Q(K, L) = K^1/2 L^1/2, where K and L are the quantities of capital and labour production inputs. Prices of capital and labour are both $2 per unit. (a) Suppose that, in the short run, capital is fixed at 4 units. What would be the minimum cost of producing 20 units of output? Illustrate your answer. (b) Now suppose that, in the long run, both capital and labour are variable. What would...
Problem 2. The firm expects that its production function in the next period will be given by Fe(K, L)-10 v KL. The firm employs 25 workers. The real interest rate equals 5% and the depreciation rate equals 20%. The price for the firm's products is 1 EUR while the price of capital goods is 10 EUR a) Find the user cost of capital. Find net investments, assuming that initially the firm has a capital stock of 88. Modify your answer...
Problem 2. The firm expects that its production function in the next period will be given by Fe (KL) 10VKL. The firm employs 25 workers. The real interest rate equals 5% and the depreciation rate equals 20%. The price for the firm's products is 1 EUR while the price of capital goods is 1O EUR Find the user cost of capital. Find net investments, assuming that initially the firm has a capital stock of 88. Modify your answer to part...
1). Suppose that a firm uses inputs labour (L, measured in person hours) and capital (K, measured in machine hours) in the production of its output (Q) according to the production function Q min{2L, 3K} (a) Draw the isoquant line associated with 12 units of output. Measure K along the vertical axis and L along the horizontal axis. (b) Suppose that the price of labour is $2/person hour, and the price of capital is $4 / person hour. What is...
12. Consider a firm with production function f(K,L) = K+L. (a) Suppose that capital level is currently fixed at K = 10. Find the short term production cost function for producing outputs greater than or equal to 10 units when w = 1 and r = 1. (b) Suppose wage goes up to w' = 2 while the price of capital remains same at r = 1. Find the new short-run cost function for producing output greater than or equal...
2 1 4. A firm has a production function of f(L,K) = L3K3. If the wage rate per labour is 10, rental rate per capital is 5, the long run cost-minimizing capital-labour ratio is: A) 4 B) 2 C) 1 D) 0.25
11. Consider the production function: f(K,L)=K+L. Let w and r 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. (b) Find the profit maximizing output level and the profit function. 12. Consider a firm with production function f(K,L) = K +L. (a) Suppose that capital level is currently fixed at K = 10. Find the short term production cost function for...
9. Suppose the firm's production function is given by f(K,L) = min (Kº,L"} (a) For what values of a will the firm exhibit decreasing returns to scale? Constant returns to scale? Increasing returns to scale? (b) Derive the long-run cost function and the optimal input choices. (c) Suppose the capital is fixed at K = 10,000 and a = 1. Assuming that the firm wants to produce less than 100 units, derive 10. Consider the production function: f(K,L)=KLI. Let w...
Consider a firm with production function f(K,L) = K +L. (a) Suppose that capital level is currently fixed at K = 10. Find the short term production cost function for producing outputs greater than or equal to 10 units when w = 1 and r=1. (b) Suppose wage goes up to w' = 2 while the price of capital remains same at r = 1. Find the new short-run cost function for producing output greater than or equal to 10...
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