Maximising levels of capital, Econometrics

A perfectly competitive firm hires its machines at a constant rental rate of r = 5 euros per unit and its workers at a constant wage rate of w = 4 euros per unit. It can also sell as much output as it wishes at the ruling market price of P = 40 euros. The firm's production function is given by:  

 Q = K0.25 L0.5

where L  is labour and K  is capital.

(a) If the firm wishes to maximise profits, write down the constrained maximum problem that the firm faces.

(b) Determine the profit maximising levels of capital, labour and output. 

Posted Date: 3/25/2013 5:35:25 AM | Location : United States







Related Discussions:- Maximising levels of capital, Assignment Help, Ask Question on Maximising levels of capital, Get Answer, Expert's Help, Maximising levels of capital Discussions

Write discussion on Maximising levels of capital
Your posts are moderated
Related Questions
Hedging ?nancial risk is a very important practical issue in economics.  In this exercise, you will derive your optimal hedge ratio, assuming that you are an expected utility maxim

how to find the relationship for a simple linear model?

Assume the price elasticity of cigarettes is 0.25. By how much would prices have to increase to get a 20% reduction on smoking?

i need help in project

demand analysis of fast food among civil servant

Your firm will produce widgets for the next 10 years (starting at t=1). Annual revenue from selling widgets is $20,000. Production requires an initial outlay (at t=0) for machin

how might short and long term goals between a business and the government differ?

Outdoor Travel Inc. needs to estimate the cost of capital for the evaluation of capital expenditures. A typical project is financed with 25% debt-to-value ratio (i.e., D/(D+E) = 0.

You have collected data for 104 countries to address the difficult questions of the determinants for differences in the standard of living among the countries of the world. You rec

Suppose a small open economy is characterised by the following equations/information:             Y =6K 0 L 1-α             K 0 = 30,000             L 0 = 10,000