Two factors of production according to technology

Assignment Help Business Economics

Reference no: EM131099369

A firm produces output using two factors of production according to technology f(x1, x2) = (x1^1/2)(x2^1/4). The price of output is 4. Factors 1 and 2 cost to the firm w1 and w2 per unit, respectively. (i) Write an expression for the firm’s profit. (ii) Write an equation having on the left hand side the marginal product of input 1 times the price of output and on the right hand side its wage (w1). Do the same for input 2. (iii) Solve the two equations you found in (ii) in the two unknowns, x1 and x2. (This will give the amounts of factors 1 and 2 that maximize the firm’s profits.) (iv) If w1 = 2 and w2 = 1, how many units of factors 1 and 2 will the firm demand? How much output will it produce? How much profit will it make?

Reference no: EM131099369

Questions Cloud

Which is the better deal for you if the annual interest rate : Suppose you are buying a car. You go to one dealer who works a deal in which you would pay $3,740 each year for three (3) for the car. Another deal gives you a deal in which you would pay $2,870 each year for the four (4) years. Which is the better d..

The effects of this tax on the market for hard liquor : The senate of Puerto Rico recently decided to raise the taxes on soft-drinks (Coca-Cola, Seven-Up, etc.) Graphically illustrate the effects of this tax on the market for hard liquor. Would a $1 increase in the excise tax on liquor increase the equili..

Orders of computer chips from intel and other vendors : During the beginning of the 21st century, the growth in desktop computer sales declined for the first time in almost two decades. As a result, PC makers dramatically reduced their orders of computer chips from Intel and other vendors. Explain why com..

Two factors of production according to technology : A firm produces output using two factors of production according to technology f(x1, x2) = (x1^1/2)(x2^1/4). The price of output is 4. Factors 1 and 2 cost to the firm w1 and w2 per unit, respectively. (i) Write an expression for the firm’s profit. (..

Completition in perfect competition situation : It is said that there is no completition in a perfect competition situation. Why? Give an example to illustrate this. Name 3 commodities that you would consider to be bought and sold in a perfect competition market situation. If someone is producing ..

Short-run production function of profit maximizer firm : The short-run production function of a profit maximizer 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. (i) How many units of labor will the firm ..

Nurturing and strengthening the five key capitals : [1] In your own words explain to me what are the four perspectives on globalization and how they differ. [2] Sustainable development depends on the nurturing and strengthening the five key ‘capitals’ What are they and how do they differ from one anot..

Determine equilibrium price-quantity before and after tax : Suppose that government imposes a $5 excise tax on each case of beer. Determine the equilibrium price and quantity before and after the tax. How much tax revenue does the government receive? What is the consumer’s tax burden? The producer’s burden?

User Account

All Pages