Question

Suppose that a firm's fixed proportion production function is given by q = min(2k, 4L), and...

Suppose that a firm's fixed proportion production function is given by q = min(2k, 4L), and that the rental rates for capital and labor are given by v = 1, w = 3.

A) Calculate the firm's long-run total, average, and marginal cost curves.

B) Graph these curves.

C) Suppose that k is fixed at 10 in the short run. Calculate the firm's short-run total, average, and marginal cost curves and graph them.

D) Now suppose in the long run the firm faces a market demand for its products of: 10 d (q^d)=10-P    Where P is the price charged by the firm. Find the profit maximizing output for this firm and the price it charges.

Homework Answers

Answer #1

NOTE: I did not answer sub part D, as the question is unclear. PLEASE CLARIFY WHAT IS THE MARKET DEMAND FUNCTION.

The fixed proportion production function is given as :

To produce "q" units of output, the firm wants to use q/2 units of K and q/4 units of L, irrespective of the input prices.So, the conditional input demands are:

(A).The firm's long run total cost is

  

The firm's average cost is

The firm's marginal cost is

(B) The below plot shows the Total cost curve(TC) for various output levels. The marginal cost curve(MC) and the average cost are constant and both are same.

(C)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The production of sunglasses is characterized by the production function Q(L,K)= 4L^1/2K^1/2. Suppose that the price...
The production of sunglasses is characterized by the production function Q(L,K)= 4L^1/2K^1/2. Suppose that the price of labor is $10 per unit and the price of capital is $90 per unit. In the short-run, capital is fixed at 2,500. The firm must produce 36,000 sunglasses. How much money is it sacrificing by not having the ability to choose its level of capital optimally? That is, how much more does it cost to produce 36,000 sunglasses the short-run compared to the...
The production function for a firm is Q = −0.6L 3 + 18L 2K + 10L...
The production function for a firm is Q = −0.6L 3 + 18L 2K + 10L where Q is the amount of output, L is the number of labor hours per week, and K is the amount of capital. (a)Use Excel to calculate the total short run output Q(L) for L = 0, 1, 2...20, given that capital is fixed in the short run at K = 1. (b) Use Excel to calculate the total long run output Q(L) for...
A firm’s production function is Q! = min(4L ,5K ). The price of labor is w...
A firm’s production function is Q! = min(4L ,5K ). The price of labor is w and the price of capital is r. a) Derive the demand function of labor and capital respectively. How does the demand of capital change with the price of capital? b) Derive the long-run total cost function. Write down the equation of the long-run expansion path. c) Suppose capital is fixed at K = 8 in the short run. Derive the short-run total cost function....
The production of sunglasses is characterized by the production function Q(L,K)= 4L1/2K 1/2 . Suppose that...
The production of sunglasses is characterized by the production function Q(L,K)= 4L1/2K 1/2 . Suppose that the price of labor is $10 per unit and the price of capital is $90 per unit. In the short-run, capital is fixed at 2,500. The firm must produce 36,000 sunglasses. How much money is it sacrificing by not having the ability to choose its level of capital optimally? That is, how much more does it cost to produce 36,000 sunglasses the short-run compared...
The production function for aluminum is given by Q= L1/4E1/4K1/2where L is the amount of labor...
The production function for aluminum is given by Q= L1/4E1/4K1/2where L is the amount of labor hired, E is the amount of energy consumed and K is the amount of capital used. Suppose that the price of energy is 4, the wage rate is 1 and the price of capital is also 1. a)Suppose in the short run the number of units of capital is fixed at 10. Set up the factory's cost minimization problem and solve for the optimal...
A monopolistically competitive firm faces the inverse demand curve P = 100 – Q,and its marginal...
A monopolistically competitive firm faces the inverse demand curve P = 100 – Q,and its marginal cost is constant at $20. The firm is in long-run equilibrium. a.Graph the firm's demand curve, marginal revenue curve, and marginal cost curve. Also, identify the profit-maximizing price and quantity on your graph. b.What is the value of the firm's fixed costs? c.What is the equation for the firm's ATC curve? d.Add the ATC curve to your graph in part a please actually graph...
Suppose a firm's short-run production function is given by Q = 14L +4KL. And, K is...
Suppose a firm's short-run production function is given by Q = 14L +4KL. And, K is fixed at 1. What is the marginal product of the fourth worker? 4 14 14L 18
A firm has the following production function: q=5LK^0.5+2L^2K-L^3K What is its short-run production function if capital...
A firm has the following production function: q=5LK^0.5+2L^2K-L^3K What is its short-run production function if capital is fixed at K=9? What are the firm’s marginal product of labour and average product of labour in the short run? Show that the firm’s elasticity of output with respect to labour in the short run is a function of marginal product of labour and average product of labour. Calculate the short-run elasticity of output with respect to labour
A patent monopolist faces a demand curve: P=10-1/3 Q and total cost F+2Q+2/3 Q^2, where F...
A patent monopolist faces a demand curve: P=10-1/3 Q and total cost F+2Q+2/3 Q^2, where F is non-negative. i. What is the monopolist’s short-run profit-maximizing output and price? What is his short-run profit per period? ii. In addition to solving for the profit-maximizing output and price, draw a graph showing the inear demand curve, the marginal revenue and marginal cost curves that demonstrate the situation described above
(2) Consider the production function f(L, K) = 2K √ L. The marginal products of labor...
(2) Consider the production function f(L, K) = 2K √ L. The marginal products of labor and capital for this function are given by MPL = K √ L , MPK = 2√ L. Prices of inputs are w = 1 per hour of labor and r = 4 per machine hour. For the following questions suppose that the firm currently uses K = 2 machine hours, and that this can’t be changed in the short–run. (e) What is the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • what type of graph is best suitable for data obtained from customer ratings. The ratings are...
    asked 1 minute ago
  • Determine the cumulative 15-year 18 kip ESAL’s in the design lane for 2-lane highway for the...
    asked 8 minutes ago
  • Q: Dr.Grimace, the evil dentist, is trying to find out if his patients suffer from periodontal...
    asked 8 minutes ago
  • After collecting data on 19283 dogs, you find that male vallhunds have an average weight of...
    asked 10 minutes ago
  • Research Target Corporation and assess your satisfaction with the company you researched and make recommendations about...
    asked 11 minutes ago
  • Evidence suggests that 70% of FSU students like turtles. Suppose we randomly sampled 15 FSU students....
    asked 11 minutes ago
  • Ulrich challenges the appropriateness of the nearly universal symbolism of the spinning wheel as the marker...
    asked 12 minutes ago
  • Differential Equations: Please try to computer type, if not possible be clear and organize. Thank you...
    asked 12 minutes ago
  • In your opinion, what are the three (3) most important benefits an employer can give to...
    asked 18 minutes ago
  • In a test of the effectiveness of garlic for lowering​ cholesterol, 81 subjects were treated with...
    asked 21 minutes ago
  • How does the 95% confidence interval correspond to the reported conclusion at a 0.05 significance level?...
    asked 21 minutes ago
  • 1) Consider the following Java program, which one of the following best describes "setFlavor"? public class...
    asked 21 minutes ago