Question
In: Economics
Assume a firm's production is as follows: Q= L^0.5K A. Does this firm exhibit diminsishing...
Assume a firm's production is as follows:
Q= L^0.5K
A. Does this firm exhibit diminsishing returns with respect to labor?
B. Does this firm exhibit dimishing returns with respect to capital?
C. In the long run, does this firm exhibit increasing, constant, or decreasing returns to scale?
D. Construct a short run cost function for this firm, assuming capital is fixed.
E. Identify the TVC and TFC in the short run cost function
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Assume a firm's production is as follows: Q= L^0.5K A. Does this firm exhibit diminsishing...
Assume a firm's production is as follows:
Q= L^0.5K
A. Does this firm exhibit diminsishing returns with respect to
labor?
B. Does this firm exhibit dimishing returns with respect to
capital?
C. In the long run, does this firm exhibit increasing, constant,
or decreasing returns to scale?
D. Construct a short run cost function for this firm, assuming
capital is fixed.
E. Identify the TVC and TFC in the short run cost function
F. Construct a MC function
Question 4 A firm has the short-run production function as follows: Q = L + 15L2...
Question 4
A firm has the short-run production function as follows:
Q = L + 15L2 – 0.5L3,
where Q = total products per period and L = number of workers
employed per period.
4.1) Derive the marginal product of labor (MPL). At
what number of workers (L) does the law of diminishing returns
begin?
MPL = f(L) = __________________________________
Law of diminishing return begins when L
= ___________ workers.
4.2) Derive the average product of labor (APL). Find
the number...
Select all of the production functions that exhibit constant returns to scale. Q = min{K,L} Q...
Select all of the production functions that exhibit constant
returns to scale.
Q = min{K,L}
Q = K + L
Q = (K + L)2
Q = KL
Q = min{2K,3L}
Q = K.3L.7
Q = 2K + L
2. Suppose that a firm's production function is given by Q = KL(MPK = L and...
2. Suppose that a firm's production function is given by Q =
KL(MPK = L and MPL = K), where Q is the quantity of output, K is
units of capital, and L is units of labor. The price per unit of
labor and capital are $30 and $20, respectively.
(a) How many units of labor and capital should the firm use if
it wants to minimize the cost of producing 600 units of output?
(b) Suppose that the firm...
The firm's production function as reported by the firm's production engineer is as follows: # of...
The firm's production function as reported by the firm's
production engineer is as follows:
# of Labor Units may be employed per week
# of chairs may be produced
0
0
1
5
2
15
3
25
4
35
5
39
6
42
7
44
8
45
Moreover, the accounting department reports that the wage rate
is $10, the unit cost of raw material is $1, the firm needs one (1)
unit of raw material for each chair and the...
QUESTION 3 A firm's production function is Q = 2 KL, with MP L = 2K...
QUESTION 3
A firm's production function is Q = 2 KL, with
MP L = 2K and MP K = 2L. The wage rate is $4
per hour, and the rental rate of capital is $5 per hour. If the
firm wishes to produce 100 units of output in the long run, how
many units of K and L should it employ?
a.
K = 6.33; L = 7.91.
b.
K = 2; L = 2.
c.
K = 4;...
Suppose a firm's short run-run production function is q = 2 * L0.5 , the firm...
Suppose a firm's short run-run production function is q = 2 *
L0.5 , the firm faces a fixed price of L at PL = 4, and
the firm’s fixed cost is 50.
a. Derive the short-run total cost and total variable cost
functions, and then solve for the marginal cost, average variable
cost, and average total cost functions. Assume the firm is a
marginal price taker at P = 60, solve for the firm’s
profit-maximizing amount of L to...
Consider the firm with production function given by q = f ( L , K )...
Consider the firm with production function given by q = f ( L ,
K ) = L ^(1/4) K^(1/4). If w = r = 4, what is the change in the
producer surplus when the price increases from $16 to $32? (round
your answer to one decimal place if necessary)
Suppose that the firm has a production function described by q=0 if L≤6 q = −(L^3)/6+K(L^2)+26K...
Suppose that the firm has a production function described by
q=0 if L≤6
q = −(L^3)/6+K(L^2)+26K if L>6
Further suppose that we are concerned only in the short run and
that the units of capital employed are currently fixed at 8. Also,
suppose that labor units are integer. That is, they can only be in
terms of whole numbers 1, 2, 3, ... and so on. Suppose that the
price of each unit produced by the firm is 2.
1....
Consider the production function F(L,K) = L^2/3 K^2/3 . (f) Does this production function exhibit increasing,...
Consider the production function F(L,K) = L^2/3 K^2/3 .
(f) Does this production function exhibit increasing, decreasing
or constant returns to scale? Explain.
(g) Find the total cost, average cost and marginal cost of
producing y units of output. Is the average cost increasing or
decreasing in y? Is the marginal cost higher or lower than the
average cost?
Question 2 The production of magic chairs requires only two
inputs: seats (S) and legs (L) (no other inputs are required...
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