Question
In: Economics
A firm produces mineral water according to the following hourly production function y = ln(k+1) +...
A firm produces mineral water according to the following hourly production function y = ln(k+1) + ln(l+1), where k is the amount of capital and l the amount of labor used. Suppose that mineral water can be sold for $60 a ton. Capital goods can be rent at the rate of $15 an hour and the wage rate for workers is $10 an hour.
c) If the firm tries to maximize its profit in the long run, how many units of capital should it rent? How many workers should it hire? (10 points)
d) Suppose that the price of mineral water goes up to $70 a ton. Should the firm hire more workers in the long run? Please explain why. (4 points)
Solutions
Rahul Sunny answered 3 months agoRelated Solutions
A firm produces plastic water bottles according to the production function ? = ?(?,?) = ?...
A firm produces plastic water bottles according to the
production function ? = ?(?,?) = ? 2?, where ? is the number of
water bottles produced, ? is the quantity of labor employed and ?
is the quantity of capital. The associated marginal product
functions are ??? = 2?? and ??? = ? 2 . The cost per unit of labor
and capital are ? = $4 and ? = $2, respectively.
1) If this firm wants to produce a...
A firm produces output according to the production function: Q= F(K, L) = 4K + 8L.
A firm produces output according to the production function: Q= F(K, L) = 4K + 8L. a. How much output is produced when K= 2 and L = 3? b. If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost-minimizing input mix for producing 32 units of output? c. If the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour, what is the...
Consider the following hourly production function: Y = 5 K.3 L.7 for an economy. Furthermore, the country...
Consider the following hourly production function: Y = 5
K.3 L.7 for an economy.
Furthermore, the country in question has a labor supply of 10
million, and a capital stock of 1 billion. What is the equilibrium
hourly wage for this country (rounded to 2 decimals)? Show your
work!
A firm produces output according to the following function: q = f (L, K) = L^1/2...
A firm produces output according to the following function: q =
f (L, K) = L^1/2 K^1/4 . The
cost of labor is $8 per hour and the rental cost of capital is
$2 per hour.
a. Determine the returns to scale for this function.
b. Suppose the firm wishes to produce at cost $96. How much
capital and how
much labor does the firm employ?
c. Derive the short-run cost function with optimal amount of K
from part b....
Consider a firm which produces according to the following production function by using labor and capital:...
Consider a firm which produces according to the following
production function by using labor and capital:
f(l,k) = k1/4 / 1/2
(a) Solve the cost minimization problem of this firm for the
given wage rate, w and the rental rate of capital,v.
(b) Derive the cost function of the firm.
(c) Solve the profit maximization of the firm for a given price
p, and derive the supply function.
(d) Derive the profit function of the firm.
(e) Suppose demand for...
Consider a firm which produces according to the following production function by using labor and capital:...
Consider a firm which produces according to the following
production function by using labor and capital: f(l,k) =
K1/2 L1/2
(a) Solve the cost minimization problem of this firm for the
given wage rate, w and the rental rate of capital,v. Derive the
long-run total cost function of the firm.
(b) Derive the short-run total cost, the short-run average cost,
the short- run marginal cost function of the firm under the
assumption that capital is the fixed input.
(c) What...
A firm produces gizmos according to the production function Q =10KL , where Q is the...
A firm produces gizmos according to the production function Q
=10KL , where Q is the quantity of gismos produced, K is the
quantity of capital rented and L is the quantity of labour hired.
The manager has been given a production target: Produce 9,000
gizmos per day. He is informed that the daily rental price of
capital is $400 per unit and the wage rate is $200 per day. a)
Currently, the firm has 10 units of capital. How...
A firm can manufacture a product according to the production function: Q = F(K, L) =...
A firm can manufacture a product according to the production
function: Q = F(K, L) = K3/4L1/4. a. Calculate the average product
of labor, APL, when the level of capital is fixed at 81 units and
the firm uses 16 units of labor. Instruction: Enter your responses
rounded to three decimal places. 3.375 What is the average product
of labor when the firm uses 256 units of labor? 0.422 b. Find an
expression for the marginal product of labor, MPL,...
Suppose the production function of a country is Y equals K to the power of 1...
Suppose the production function of a country is Y equals K to
the power of 1 third end exponent L to the power of 2 over 3 end
exponent . And its capital stock is K equals 27 and labor force is
L to the power of s equals 64. Calculate the following (Enter only
numbers. Round up to ONE decimal place if needed) (a) What is the
labor market clearing real wage under flexible real wage? (b) What
is...
The residents of Seltzer Springs, Michigan, consume bottles of mineral water according to the demand function...
The residents of Seltzer Springs, Michigan, consume bottles
of
mineral water according to the demand function D(p) = 1, 000 −
p. Here
D(p) is the demand per year for bottles of mineral water if the
price per
bottle is p.
The sole distributor of mineral water in Seltzer Springs, Bubble
Up,
purchases mineral water at c per bottle from their supplier
Perry Air.
Perry Air is the only supplier of mineral water in the area and
behaves
as a...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 38. A contract with an illegal principal objective is typically which of the following? Answers: A....
- Explain how advances in technology can force a software subsystem to undergo change or run the...
- Discuss whether you agree or disagree on whether you think E-mails need to be managed and...
- b. Do any unions represent employees in Microsoft? Describe which unions are involved. c. Have there been...
- Look up and use each of these Linux commands. (Each command will have two parts) Summarize...
- What was Lincoln 10 percent plan and what problems did it present?
- A cantilever beam 4m long carries a uniform load of 3.5 kN/m over a portion 1.5m...
ADVERTISEMENT