Q1:
What are the first and second-order conditions for profit maximization for a firm operating under perfect competition? Give an economic interpretation of both conditions.
I've explained the 1st order and 2nd order condition
mathematically in below picture.
Q1: What are the first and second-order conditions for profit maximization for a firm operating under...
Problem 3 - Profit Maximization Consider the case of a firm that produces output x (sold at price p) using a production function x = A*1941-a-Beß, where lis labor, k is capital, and e is energy (for example, oil or electricity). a) What is the interpretation of A? b) Under what condition(s) does the production function exhibit constant returns to scale? Is it homogeneous? Are the marginal products of inputs increasing, constant, or decreasing? c) Set up the profit maximization...
Below are eight descriptions of firms operating under various market conditions. For each item, determine whether the market is a monopoly or a market with perfect competition.Items (8 items) (Drag and drop into the appropriate area below)A firm in this market has no market powerA firm in this market produces where P > MCA firm in this market has significant market powerA firm in this market is one of many small competitorsA firm in this market has no competitorsA firm in this...
(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What impact does this have on the firm demand curve? (4 marks) (b) “Firm operating under perfect competition can only earn zero economic profit in the long run" Discuss this statement (6 marks)
(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What impact does this have on the firm demand curve? (4 marks) (b) “Firm operating under perfect competition can only earn zero economic profit in the long run" Discuss this statement (6 marks)
(a) Consider a two-product firm that is operating under pure competition - I.e. the the prices of the two commodities Pci and Pcz are taken as exogenous. The revenue function for the firm will be: Rc = Pcılı + PczQ2 Where the subscripts C indicates pure competition and Q1 and 22 represent the output level of the two products. The firm's cost function is assumed to be: C = 20,? + Q1 Q2 +2Qz? (1) Compute the marginal cost of...
Problem 3 - Profit Maximization Consider the case of a firm that produces output x (sold at price p) using a production function x = A*/*k1-a8eß, where Iis labor, k is capital, and e is energy (for example, oil or electricity). a) What is the interpretation of A? b) Under what condition(s) does the production function exhibit constant returns to scale? Is it homogeneous? Are the marginal products of inputs increasing, constant, or decreasing? c) Set up the profit maximization...
Use
first order condition and second order condition
thank you so much
Тип уоu • 7. Perfectly competitive firm faces P(Q) = inverse demand curve and its costs are given by a cost function C(Q), assuming that marginal costs are positive. Firm is also taxed at rate t per unit of output. (a) Write down the firm's profit function. Identify the choice variable, and the parameter if the firm maximizes the profit. (b) Write down the FONC for profit maximization....
3. A firm produces two goods in pure competition and has the following total revenue and total cost function. TR(X1,X2) = 18x1 + 15x2 (a) Maximize profits for the firm, using matrix inversion to solve the first-order conditions. 13) Answer: 3 (. Refar to the fim in Question 3(0) use the Hessian to check the second conditions for profit maximization. 13] Answer:
3. A firm produces two goods in pure competition and has the following total revenue and total cost...
6. A purely competitive firm has a single variable input L (labor), with the wage rate Wo per period. Its fixed inputs cost the firm a total of Fdollars per period. The price of the product is Po. (a) Write the production function, revenue function, cost function, and profit function of the firm, (b) What is the first-order condition for profit maximization? Give this condition an economic interpretation. ( What economic circumstances would ensure that profit is maximized rather than...
Maximization of net benefits for a two period model (also profit maximization of a single owner). Two conditions must be satisfied: (P2 – MC2) = (1 + r)(P1 – MC1) q1 + q2 = qtotal In the numerical example given in lecture, the inverse demand function for the depletable resource is P = 8 – 0.4q and the marginal cost of supplying it is $2. If 20 units are to be allocated between two periods, in a dynamic efficient allocation...