Competitive firm has the production function

Assignment Help Business Economics

Reference no: EM13896582

A competitive firm has the production function y = min{ √ L, √ K}, where L is labor and K is capital. Suppose that in the short run this firm must use 16 units of capital but can vary its amount of labor freely. 1 (a) Write down a formula that describes the marginal product of labor in the short run as a function of the amount of labor used. (b) If the wage is w = $1 and the price of output is p = $4, how much labor will the firm demand in the short run? (c) What if w = $1 and p = $10?

Reference no: EM13896582

Questions Cloud

The quantities produced before and after the tax was imposed : The inverse demand function for mangos is defined by the equation p = 91 − 5q, where q is the number of crates that are sold. The inverse supply function is defined by p = 3 + 6q. In the past there was no tax on mangos but now a tax of $44 per crate ..

How many units of output will the firm produce : A competitive firm’s production function is y = 6√ x1 + 8√ x2. The price of factor 1 is $1 and the price of factor 2 is $4. The price of output is $8. How much of each factor should the firm use to maximize its profit? How many units of output will t..

What is the technical rate of substitution : Suppose the production function is Cobb-Douglas, y = x 1/2 1 x 3/2 2. What is the technical rate of substitution? Does this technology demonstrate increasing, decreasing or constant returns to scale?

Does this firm have constant returns to scale : A firm has the production function y = x1 + min{x1, x2}. Draw three isoquants for this firm. Does this firm have constant returns to scale?

Competitive firm has the production function : A competitive firm has the production function y = min{ √ L, √ K}, where L is labor and K is capital. Suppose that in the short run this firm must use 16 units of capital but can vary its amount of labor freely.

What price total quantity demanded by the two consumers : Suppose consumer 1 has the demand function given by D1(p) = 15−p and consumer 2 has the demand function given by D2(p) = (20 − p)/3. At what price the total quantity demanded by the two consumers is 7?

The market for tennis shoes has a horizontal supply curve : The market for tennis shoes has a horizontal supply curve and a linear, downward-sloping demand curve. Currently the government imposes a tax of t on every pair of tennis shoes sold and does not tax other goods. The government is considering a plan t..

The demand curve for salted codfish : The demand curve for salted codfish (saltfish) is D(p) = 200 − 5p and the supply curve is S(p) = 5p. On a graph with saltfish on the horizontal axis and the price of saltfish on the virtical, draw the demand and supply curves. What is the equilibrium..

User Account

All Pages