Suppose that we have perfectly competitive input markets (for both capital and labor) and output markets....
Suppose that we have perfectly competitive input markets (for both capital and labor) and output markets. Firm "Tropical Juice" produces orange juice which it sells at $6. The input price that the firm faces is an hourly wage of $5 and the rental rate of $2.
Furthermore, the firm currently has a capital stock of 2.
Find the labor demanded by the firm in the short run under the following production technologies.
a) f(k,l) = k0.1l0.9
b) f(k,l) = max{k, 4l(1/2)}
c) Given the answers in part a and b, rewrite both problems as a cost minimization problem and show the labor demanded for the optimal quantity produced is the same.
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Suppose that we have perfectly competitive input markets (for
both capital and labor) and output markets....
7. Suppose a perfectly competitive firm uses capital and labor to produce a single output. The...
7. Suppose a perfectly competitive firm uses capital and labor to produce a single output. The firm's exogenous price for output is Po. The firm's exogenous cost for capital is ro. The firm's exogenous cost for labor is wo. The firm's production function is given by Q = f(K, L) where: 8f/8K, 8f/OL>0, 62f/8K2, 82f/8L2 <0, and 82f/8KOL = 0 a) Given the profit function for the firm. b) Find the FOC's for K* and L* that allow profit maximization....
3. Suppose a perfectly competitive firm uses capital and labor to produce a single output. The...
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Given a perfectly competitive firm in the input and output markets where: P0= exogenous price, Q...
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7. Suppose a perfectly competitive firm uses capital and labor to produce a single output. The firm's exogenous price for output is Po. The firm's exogenous cost for capital is ro. The firm's exogenous cost for labor is wo. The firm's production function is given by Q = f(K, L) where: 8f/8K, 8f/OL>0, 62f/8K2, 82f/8L2 <0, and 82f/8KOL = 0 a) Given the profit function for the firm. b) Find the FOC's for K* and L* that allow profit maximization....
3. Suppose a perfectly competitive firm uses capital and labor to produce a single output. The firm's exogenous price for output is Po. The firm's exogenous cost for capital is ro. The firm's exogenous cost for laboris Wo. The firm's production function is given by Q = f(K, L) where: 8f/8K, 8f/8L >0, 82f/8K2, 82f/8L2 <0, and 82f/8K6L = 0 a) Given the profit function for the firm. b) Find the FOC's for K* and L* that allow profit maximization....
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A perfectly competitive firm uses a single input (labor) to produce a good according to a production function Q(L) = 2/7 , where Lis the amount of labor it uses. The good sells for $180 per unit (price). The input costs $15 per unit (wage). 1. (20 pts) What is the profit-maximizing amount of input (L)? 2. (10 pts) What is the profit-maximizing amount of output (Q)? 3. (10 pts) How much profit does the firm make when it maximizes...
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