6. The profit function of a firm is (x,y) = px +qy-ar? - By?, where p...
4. The demands for a monopolist's two products are determined by the equations p=25 - x and q=24 - 2y, where p and q are prices per unit of the two goods, and x and y are the corresponding quantities. The costs of producing x units of the first good and y units of the other are C(x,y) = 3x + 3xy + y2 (a) Find the monopolist's profit (x,y) from producing and selling x units of the first good...
9. Consider the utility maximization problem max x + y s.t. px + y =m, where the constants p, 9, and m are positive, and the constant a € (0,1). (a) Find the demand functions, x* (p, m) and y* (p, m). (b) Find the partial derivatives of the demand functions w.r.t. p and m, and check their signs. (c) How does the optimal expenditure on the x good vary with p?8 (d) Put a = 1/2. What are the...
Consider the following utility function of 3 goods, x, y and z: U(x,y,z)=ax+by+cz; x,y,z≥0 and a, b, c are constants. The prices of good x and y is denoted by pX and pY respectively. The income is denoted by m. Good z is provided by the government free of cost but the quantity of good z provided by the government depends on the consumption of good x and y chosen by the consumer. For example, if in equilibrium, the consumer...
2 and 4b please e Iheorem 13.2.1 to prove that it is a A firm produces two different kinds, A and B, of a commodity. The daily cost of producing Q its of A and Q2 units of B is C(Q1,02)-0.10 +0102 +Q. Suppose that the firm sells all its output at a price per unit of P1 120 for A and P290 for B. (a) Find the daily production levels that maximize profits. (b) If P2 remains unchanged at...
2. A firm produces (= units of a commodity when labour input is L units. The price obtained per unit of output is P, and the price per unit of labour is w, both positive. (a) Write down the profit function w. What choice of labour input L=L* maximizes profits? (b) Consider L* as a function L (P, w) of the two prices, and define the value function (P, w) = (L* (P, w), P, w) Verify that ax/aP =...
Consider the production function Y = x x Px= $6, Px, = $3, P, = $15 At which levels of X1, X, and Y will profit be maximized? (Hint: write a profit maximization problem and solve for profit maximization condition using MPP and price ratio)
6. Suppose that the price of good X is $1 and the price of good Y is $1, and that income is $7. The following tables show the marginal utility schedules for X and Y: Good X: Good Y: Qx MUx Qy MUy 1 15 1 12 2 11 2 9 3 9 3 6 4 6 4 5 5 4 5 3 6 3 6 2 7 1 7 1 How much of good X and how much of good Y should the individual purchase to maximize utility? Explain how you know. (Hint: There are 2 conditions that must be satisfied.)
SM 3. A firm uses capital K, labour L, and land T to produce units of a commodity, where Q=K2/3+ 1/2+/3 Suppose that the firm is paid a positive price p for each unit it produces, and that the positive prices it pays per unit of capital, labour, and land are r, w, and q, respectively. (a) Express the firm's profits as a function of (K,L,T). Then, find the values of K, L, and T, as functions of the four...
Each firm produces both goods, i.e., good 1 and good 2. Each firm takes the market prices p 0 and p2 2 0 as firm produces T units of good 1 and x2 units of good 2, with (xi, x2) the total costs of C(x.x) = 2i+0.5«% given and chooses output to maximize profits.1 If a R2, it has 1200 (a) (1 point ) For given prices p1 and p2, find the revenue, R(x1, x2), of a single firm (b)...
11. A firm uses K and Lunits of two inputs to produce KL units of a product, where K >0,L>0. The input factor costs are r and w per unit, respectively. The firm wants to minimize the costs of producing at least units. (a) Formulate the nonlinear programming problem that emerges. Reformulate it as a maximiza- tion problem, then write down the Kuhn-Tucker conditions for the optimum. Solve these conditions to determine K and Las functions of (r,w,Q). (b) Define...