1. Consider the production function f(x1, x2) = 4x 11/2 x 21/3 . What is the...
1. Consider the production function f(x1, x2) = 4x
11/2 x 21/3 . What is
the returns to scale? Show your work.
2. What is the TRS for the above production function?
3. What is the optimal level of output that maximizes profit given
the output and input prices respectively as p, w1, w2?
Homework Answers
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1. Consider the production function f(x1, x2) = 4x
11/2 x 21/3 . What is
the...
Problem 2: A firm has the following production function: f(x1,x2) = x1 + x2 A) Does...
Problem 2: A firm has the following production function: f(x1,x2) = x1 + x2 A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) Suppose the firm wants to produce exactly y units and that input 1 costs $w1 per unit and input 2 costs $w2 per unit. What are the firm's conditional input demand functions? C) Write down the formula for the firm's total cost function as a function of w1, W2, and y.
Problem 3: A firm has the following production function: f(x1,x2) = x7/3x4/3 A) Does this firm's...
Problem 3: A firm has the following production function: f(x1,x2) = x7/3x4/3 A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the firm's Technical Rate of Substitution? What is the optimality condition that determines the firm's optimal level of inputs? C) Is the marginal product of input 1 increasing, constant, or decreasing in X1. Is the marginal product of input 2 increasing, constant, or decreasing in xz? D) Suppose the firm wants to...
Problem 4: A firm has the following production function: Xi , X2)=X1 , X2 A) Does this firm's tec...
Problem 4: A firm has the following production function: Xi , X2)=X1 , X2 A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the firm's Technical Rate of Substitution? What is the optimality condition that determines the firm's optimal level of inputs? C) Is the marginal product of input 1 increasing, constant, or decreasing in x1. Is the marginal product of input 2 increasing, constant, or decreasing in x2? D) Suppose the firm...
Suppose that a firm has the production function (1) Draw an isoquant for f(x1,x2) = 10....
Suppose that a firm has the production function (1) Draw an isoquant for f(x1,x2) = 10. (5 points) (w1, w2) respec- (2) Suppose that the price of product is p, and that the prices of factors are tively. Find the factor demand function ri(w, w2, p), x1(w1, w2, P), the supply function y(w1, W2, P), and the profit function T(w1, w2, p). (10 points)
Suppose that a firm has the production function (1) Draw an isoquant for f(x1,x2) = 10....
Problem 1: A firm has the following production function: min{x1, 2x2) f(x,x2)= A) Does this firm's technology exhibit c...
Problem 1: A firm has the following production function: min{x1, 2x2) f(x,x2)= A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the optimality condition that determines the firm's optimal level of inputs? C) Suppose the firm wants to produce exactly y units and that input 1 costs $w per unit and input 2 costs $w2 per unit. What are the firm's conditional input demand functions? D) Using the information from part D), write...
A firm has decreasing returns production function f(x1, x2)=(x1)1/6(x2) 1/3 and faces input costs w1=1 and...
A firm has decreasing returns production function f(x1, x2)=(x1)1/6(x2) 1/3 and faces input costs w1=1 and w2=2. Find the cost function.
Consider a two input firm which faces an aggregate technology for perfect compliments of y=min(3x1,x2). a....
Consider a two input firm which faces an aggregate technology for perfect compliments of y=min(3x1,x2). a. Plot isoquants for y=3,6 and 9 b. What are the returns of scale for this production function? c. For all possible prices on output, p, and on inputs, w1 and w2, are their price combinations for which a profit maximizing firm would not be able to select a price maximizing quantity (or at least one greater than 0)? Give a restriction on prices such...
NEED ANSWERS OF PART (f,g,h,j) Problem 2 [21 marks] Consider a firm that uses two inputs. The quantity used of input 1...
NEED ANSWERS OF PART (f,g,h,j)
Problem 2 [21 marks] Consider a firm that uses two inputs. The quantity used of input 1 is denoted by x, and the quantity used of input 2 is denoted by x2. The firm produces and sells one good using the production function f(x1, x2)-4x053x25. The final good is sold at price P $10. The prices of inputs 1 and 2 are w$2 and w2 $3, respectively. The markets for the final good and both...
Suppose the production function is Cobb-Douglas and f(x1, x2) = x^1/2 x^3/2 (e) What's the technical...
Suppose the production function is Cobb-Douglas and f(x1, x2) =
x^1/2 x^3/2
(e) What's the technical rate of substitution TRS (11, 12)? (f) Does this technology have diminishing technical rate of substitution? (g) Does this technology demonstrate increasing, constant or decreasing returns to scale?
A producer produces good y using inputs x1 and x2 according to the production function y...
A producer produces good y using inputs x1 and x2 according to
the production function y = xα1xβ2 where α+β < 1. The factor
prices are w1 and w2 (for input 1 and 2). The producer can sell as
much as he wants at unit price p.
A producer produces good y using inputs X1 and 22 according to the production function y = xqx, where a + B < 1. The factor prices are wi and W2 (for input...
Problem 2: A firm has the following production function: f(x1,x2) = x1 + x2 A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) Suppose the firm wants to produce exactly y units and that input 1 costs $w1 per unit and input 2 costs $w2 per unit. What are the firm's conditional input demand functions? C) Write down the formula for the firm's total cost function as a function of w1, W2, and y.
Problem 3: A firm has the following production function: f(x1,x2) = x7/3x4/3 A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the firm's Technical Rate of Substitution? What is the optimality condition that determines the firm's optimal level of inputs? C) Is the marginal product of input 1 increasing, constant, or decreasing in X1. Is the marginal product of input 2 increasing, constant, or decreasing in xz? D) Suppose the firm wants to...
Problem 4: A firm has the following production function: Xi , X2)=X1 , X2 A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the firm's Technical Rate of Substitution? What is the optimality condition that determines the firm's optimal level of inputs? C) Is the marginal product of input 1 increasing, constant, or decreasing in x1. Is the marginal product of input 2 increasing, constant, or decreasing in x2? D) Suppose the firm...
Suppose that a firm has the production function (1) Draw an isoquant for f(x1,x2) = 10. (5 points) (w1, w2) respec- (2) Suppose that the price of product is p, and that the prices of factors are tively. Find the factor demand function ri(w, w2, p), x1(w1, w2, P), the supply function y(w1, W2, P), and the profit function T(w1, w2, p). (10 points)
Suppose that a firm has the production function (1) Draw an isoquant for f(x1,x2) = 10....
Problem 1: A firm has the following production function: min{x1, 2x2) f(x,x2)= A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the optimality condition that determines the firm's optimal level of inputs? C) Suppose the firm wants to produce exactly y units and that input 1 costs $w per unit and input 2 costs $w2 per unit. What are the firm's conditional input demand functions? D) Using the information from part D), write...
A firm has decreasing returns production function f(x1, x2)=(x1)1/6(x2) 1/3 and faces input costs w1=1 and w2=2. Find the cost function.
NEED ANSWERS OF PART (f,g,h,j)
Problem 2 [21 marks] Consider a firm that uses two inputs. The quantity used of input 1 is denoted by x, and the quantity used of input 2 is denoted by x2. The firm produces and sells one good using the production function f(x1, x2)-4x053x25. The final good is sold at price P $10. The prices of inputs 1 and 2 are w$2 and w2 $3, respectively. The markets for the final good and both...
Suppose the production function is Cobb-Douglas and f(x1, x2) =
x^1/2 x^3/2
(e) What's the technical rate of substitution TRS (11, 12)? (f) Does this technology have diminishing technical rate of substitution? (g) Does this technology demonstrate increasing, constant or decreasing returns to scale?
A producer produces good y using inputs x1 and x2 according to
the production function y = xα1xβ2 where α+β < 1. The factor
prices are w1 and w2 (for input 1 and 2). The producer can sell as
much as he wants at unit price p.
A producer produces good y using inputs X1 and 22 according to the production function y = xqx, where a + B < 1. The factor prices are wi and W2 (for input...
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