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Third Problem The short-run production function of a competitive firm is given by f(L) = 6L 2/3 , where L is the amount of labor it uses. The cost per unit of labor is w = 6 and the price per unit of output is p = 3. 1. Plot a few points on the graph of this firm’s production function and sketch the graph of the production function, using blue ink. Use black ink to draw the isoprofit line that passes through the point (0, 12), the isoprofit line that passes through (0, 8), and the isoprofit line that passes through the point (0, 4). 2. What is the slope of each of the isoprofit lines? 3. How many points on the isoprofit line through (0, 12) consist of inputoutput points that are actually possible? 4. Make a squiggly line over the part of the isoprofit line through (0, 4) that consists of outputs that are actually possible. 5. How many units of labor will the firm hire? How much output will it produce? If the firm has no other costs, how much will its total profits be? 6. Suppose that the wage of labor falls to 4, and the price of output remains the same. Will the firm increase its output?
Discuss and illustrate graphically how a decrease in saving rate will affect the steady state level of capital and output. Also illustrate graphically the transition of capital and output from their old steady state level to new one.
Consider the production function q=4L^.3K^.8. In the short run, assume K=5. Derive formulas for Total Product, Average Product, and Marginal Product. Graph these three functions.
Illustrate a firm in monopolistic competition that does not make a profit but rather a loss. Now illustrate how firm exit will change demand in the long run, allowing at least some firms to break even.
Suppose that the production function for iPods is Q = 20K^0.5L^0.5. The marginal product of labor is 10(K/L)^0.5, and the marginal product of capital is 10(L/K)^0.5. Suppose that labor can be hired for $6, and capital can be rented for $9. If the fir..
Use the AD/AS model to explain and show the current economic situation. Then suggest a fiscal approach to solve the current economic situation without adding any more debt. The current MPC = .80.
how does corporate sponsorship affect the demand for the sponsor's product? why have so many companies purchased naming rights rather than purchase time to broadcast commercials during football bowl games ?
A buyer for a large sporting goods store chain must place orders for professional footballs with the football manufacturer six months prior to the time the footballs will be sold in the stores. What is the expected profit in the optimal strategy case..
Provide some examples of discrete and continuous variables. What attributes of these variables make them discrete and continuous? Why?
What is happening to the value of the U.S. dollar these days? What causes the value of the U.S. dollar to rise or fall? Who demands U.S. dollar? Who supplies U.S. dollar? When we purchase German products, does our demand for euro go up or down? What ..
Consider a world in which there is no currency also depository institutions matter only transactions deposits also desire to hold no excess reserves.
An increase in the minimum wage will tend to cause which of the following to ?occur?
Increasing returns to scale in production means. The demand curve facing a price-making firm is. In the long run all production inputs are variable. Decreasing returns to scale prevail when output increases by a proportion that is smaller than the pr..
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