Question
In: Economics
The White Noise Corporation has estimated the following Cobb-Douglas production function using monthly observations for the...
The White Noise Corporation has estimated the following Cobb-Douglas production function using monthly observations for the past two years:
ln Q = 1.386 + 0.20 ln K + 0.30 ln L + 0.25 ln N
where Q is the number of units of output, K is the number of units of capital, L is the number of units of labor, and N is the number of units of raw materials. With respect to the above results, answer the following questions when K = 400, L = 800 and N =200.
a) Determine whether the returns to scale are increasing, decreasing or constant.
b) Suppose the price of capital is $5.25 per unit, the price of labor is $7, and the price of raw materials is $17.50 per unit. This is an optimal combination of resources.
c) What price would the company have to charge for the product to maximize profit?
Solutions
Rahul Sunny answered 4 months agoRelated Solutions
1. The White Noise Corporation has estimated the following Cobb-Douglas production function using monthly observations for...
1. The White Noise Corporation has estimated the following
Cobb-Douglas production function using monthly observations for the
past two years:
ln Q = 2.773 + 0.20 ln K + 0.70 ln L + 0.70 ln
N
where Q is the number of units of output, K is the number of
units of capital, L is the number of units of labor, and N is the
number of units of raw materials. With respect to the above
results, answer the following...
1. The White Noise Corporation has estimated the following Cobb-Douglas production function using monthly observations for...
1. The White Noise Corporation has estimated the following
Cobb-Douglas production function using monthly observations for the
past two years:
ln Q = 2.773 + 0.20 ln K + 0.70 ln L + 0.70 ln
N
where Q is the number of units of output, K is the number of
units of capital, L is the number of units of labor, and N is the
number of units of raw materials. With respect to the above
results, answer the following...
Consider an economy with the following Cobb-Douglas production function:
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workers.(a) Derive the equation describing labor demand in this economy
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a. Consider a short-run problem where the firm's level of
capital is fixed at 25 units. In this case, derive an exression
that shows the optimal amount of labor (L) the firm would want to
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A certain firm in the beverage industry is faced with the following Cobb-Douglas production function of...
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comma K right parenthesis equals 4 L to the power of 0.3 end
exponent space K to the power of 0.5 end exponent
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Once again, consider the Cobb-Douglas production function ? = ?? ?? ? . a) This time,...
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?? ? . a) This time, derive the conditional input demands ? ∗ (?,
?, ?) and ? ∗ (?, ?, ?) and the associated long-run cost function
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5. A Cobb-Douglas production function will yield a cost function that has constant Marginal Cost a....
5. A Cobb-Douglas production function will yield a cost function
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6. The MC of a firm will intersect the ATC at the minimum point
of MC a. True b. False _____
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An economy has the following Cobb-Douglas production function: Y = Ka(LE)1-a The economy has a capital...
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function:
Y = Ka(LE)1-a
The economy has a capital share of 1/3, a saving rate of 24
percent, a depreciation rate of 3 percent, a rate of population
growth of 2 percent, and a rate of labor-augmenting technological
change of 1 percent. It is in steady state.
a. What is the steady-state growth rate in total output?
b. What is the steady-state growth rate in output per
worker?
c. What is the steady-state growth rate...
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