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Presume that a firm has its policies determined by a manager whose objective function is to maximize sales, i.e. revenues, without letting profit drop below some fixed level, m. Let R(y,a) denote firm's revenue when the level of production is y and the advertising level is a. Let C(y) denote cost of manufacturing y units of output and p is the per unit price of advertising. We assume dC/dy>0, dR/da>0.
1. Setup constrained optimization problem of the firm. a can be positive or 0.
2. Derive the first order conditions that maximize the firm's objective considering that a can be positive or 0. Assume now that a>0. Derive 2nd order conditions that ensure max profit.
3. Will the output chosen by the firm be equal to, less than or greater than output chosen under profit max?
Presume the official unemployment rate is 10 percent. We can conclude without question that The same 10 percent of the people in the economy were out of work for the entire year
in the old days lighthouses were built along the coast to prevent ships from running aground on rocks in unfamiliar
You win $100 in a basketball pool. You have a choice between spending the money now or putting it away for a year in a bank account that pays 5 percent interest.What is the opportunity cost of spending the $100 now?
Using the results obtained above, derive a table for the long run costs of the various levels of production of sweaters (10, 20, 30, 40). The table should show: quantity, total cost, average cost and marginal cost.
economist joseph schumpeter who taught at harvard from 1932 until his death in 1950 popularized the term creative
1) Does the goal of full employment imply zero unemployment? If not, what types of unemployment would you expect to be present if the economy is at full employment 2) Why is price stability an economic goal What are the problems associated with ra..
after graduating from college you receive job offers from five different accounting firms. all job offers have a
"A shift outward in the demand curve always results in an increase in total spending (price times quantity) in a good. On the other hand, a shift outward in the supply curve may increase or decrease total spending."
Rcognize the three phases of production and describe why the firm short run production has only one rational stage of production.
some oakland california residents are sick and tired of tripping over burger wrappers and soda cans and the city is
1. consider a macroeconomy was initially at equilibrium level of real gdp.nbsp using an aggregate supply diagram and
What equilibrium prices will we see in the market when both operators compete on prices? Why?
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