Derive long-run total cost function for producing skateboard

Assignment Help Business Economics

Reference no: EM131094751

Skateboards must be produced with exactly 4 wheels and 1 board for each skateboard. (Suppose that no assembly is required, so labor is not an input.) Let Q be the number of skateboards, W be the number of wheels, and B be the number of boards. The price of a wheel is PW and the price of a board is PB.

(a) Write down the production function for skateboards, Q(W,B).

(b) Derive the long-run total cost function for producing skateboards, TC(Q,PW, PB).

(d) On an optimal choice diagram with W on the horizontal axis and B on the vertical axis, draw the isoquant for Q = 100 and indicate the optimal choices of W and B on that isoquant. Now use this same diagram to illustrate the expansion path.

Reference no: EM131094751

Questions Cloud

Demand curve facing monopolistically competitive firm : In the long run, what happens to the demand curve facing a monopolistically competitive firm that is earning short-run profits? The demand curve will shift to the left and became more elastic. The demand curve will shift to the right and became more ..

In the long run-if price is less than average cost : In the long run, if price is less than average cost. the market must be in long-run equilibrium. there is profit incentive for firms to enter the market. there is no incentive for the number of firms in the market to change. there is an incentive for..

Monopolistically competitive market structure : Which of the following is not a characteristic of a monopolistically competitive market structure? There are low barriers to entry of new firms. All sellers sell products that are differentiated. There is a large number of independently acting small ..

Macro model-define competitive equilibrium for model : Consider the following version of our one period macro model. The representative household’s preferences are defined over consumption C and labor N. Their preferences are given by the utility function U(C, N) = C −( N^(1+ (1/ν))/( 1 + (1/ν) where ν >..

Derive long-run total cost function for producing skateboard : Skateboards must be produced with exactly 4 wheels and 1 board for each skateboard. (Suppose that no assembly is required, so labor is not an input.) Let Q be the number of skateboards, W be the number of wheels, and B be the number of boards. The pr..

Government should actively pursue an industrial policy : It is sometimes suggested that the government should actively pursue an industrial policy. Explain what this means and discuss the advantages and the disadvantages of such a policy. 2. Suggest four policies to promote growth. How is it related to the..

Discuss major issue that has arisen with bond issuances : Discuss a major issue that has arisen with bond issuances in recent years. State your position on the solvency of the market going forward.

The quantity demanded and changes-shifts in demand : What are the differences between “the quantity demanded” and “changes/shifts in demand?” What exactly are the ceteris paribus variables? Identify five such variables in the demand for Lexus automobiles and explain how those might shift the demand cur..

Economy for all possible values of the initial endowments : Consider an exchange economy with two consumers and two goods. The consumption sets of the consumers are R2+. Each consumer has the same utility function u(x1, x2) = min{x1, x2}. Provide a complete characterization of all the allocations which are in..

User Account

All Pages