Question

Suppose that you have estimated the following output function where L is labor and K is...

Suppose that you have estimated the following output function where L is labor and K is capital: Y = K1/4 L1/2.

-You know that the current price of labor is $10 and capital cost is $150 per machine (capital). You currently use 81 units of capital. For #1a, the output (Y) is 100.

1a: How many employees (L) do you need to hire to achieve your output goal?

b. Given a fixed level of capital (K=81) and a price of $100 per unit of output, what is the optimal number of employees?

c. Calculate the profit given the optimal number of employee given the answer in #1b.

d. At what number of employees would you maximize output but not lose money?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that you have estimated the following output function where L is labor and K is...
Suppose that you have estimated the following output function where L is labor and K is capital: Y = K1/4L1/2    You know that the current price of labor is $10 and capital cost is $150 per machine (capital). You currently use 81 units of capital. For #3a, the Output (Y) is 100 Using calculus, Please show all work in order to understand where things are coming from. Thank you.    a.How many employees (L) do you need to hire...
The production function is Y=K0.5L0.5 where K is capital, L is labor and Y is output....
The production function is Y=K0.5L0.5 where K is capital, L is labor and Y is output. The price of L is 1 and the price of K is 2. a) Find the optimal levels of K and L that should be employed to produce 100 units of output. What is the cost of producing this level of output? b) Will the optimal capital-labor ratio change if the price of labor goes up to 2 and the price of K goes...
A firm produces output (y), using capital (K) and labor (L). The per-unit price of capital...
A firm produces output (y), using capital (K) and labor (L). The per-unit price of capital is r, and the per-unit price of labor is w. The firm’s production function is given by, y=Af(L,K), where A > 0 is a parameter reflecting the firm’s efficiency. (a) Let p denote the price of output. In the short run, the level of capital is fixed at K. Assume that the marginal product of labor is diminishing. Using comparative statics analysis, show that...
Suppose a competitive firm’s production function is Y= 20 L1/2 K1/3. L is Labor , K...
Suppose a competitive firm’s production function is Y= 20 L1/2 K1/3. L is Labor , K is capital and Y is output. a) (4) Find the marginal product of labor and capital. b) (4) What is Marginal Rate of technical Substitution of Labor for Capital? c) (2) Does this production function exhibit increasing, decreasing or constant returns to scale? Show your work.
A firm uses two inputs, capital K and labor L, to produce output Q that can...
A firm uses two inputs, capital K and labor L, to produce output Q that can be sold at a price of $10. The production function is given by Q = F(K, L) = K1/2L1/2 In the short run, capital is fixed at 4 units and the wage rate is $5, 1. What type of production function is F(K, L) = K1/2L1/2 ? 2. Determine the marginal product of labor MPL as a function of labor L. 3. Determine the...
The production function is given by y=L1/2, where y is the output, and L is the...
The production function is given by y=L1/2, where y is the output, and L is the amount of labor input. Assume the wage rate is w so that the cost of using L unit of labor input is wL. Let p denote the unit price of the output. Note that w and p are exogenously given. (1) Find the function for the profit (in terms of p, w and L). (2) Find the optimal choice of labor input and the...
Assume that the production function in an economy is given by y=k1/2, where y and k...
Assume that the production function in an economy is given by y=k1/2, where y and k are the per-worker levels of output and capital, respectively. The savings rate is given by s=0.2 and the rate of depreciation is 0.05. What is the optimal savings rate to achieve the golden-rule steady state level of k?
suppose a firms output is given by the funcation q=12L-L^2 where L is labor. the firm...
suppose a firms output is given by the funcation q=12L-L^2 where L is labor. the firm sells its output for 10 in the competitive market find (a) MPL (b) write the expression for the firms demand for labor (c) what is the optimal number of workers the firm will hire if the wages are 60
A firm produces an output with the production function Q=K*L2, where Q is the number of...
A firm produces an output with the production function Q=K*L2, where Q is the number of units of output per hour when the firm uses K machines and hires L workers each hour. The marginal product for this production function are MPk =L2 and MPl = 2KL. The factor price of K is $1 and the factor price of L is $2 per hour. a. Draw an isoquant curve for Q= 64, identify at least three points on this curve....
Suppose your production technology is q = L0.25K0.75 , where K is capital and L is...
Suppose your production technology is q = L0.25K0.75 , where K is capital and L is labour. The price of output is $3 per unit and the price of labour is $4 per unit. If capital is fixed at 81, what is the optimal quantity of labour in the short run?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT