A firm has a daily production function q = 2.5L^1/3K^1/3. Currently, the firm rents 8 pieces of equipment. The amount of equipment is fixed in the short run. The unit wage rate is $25 while the rental cost of capital is $100.
Find the short run production function.
Find the number of workers the firm wishes to employ to produce q units (the short run conditional demand for labor).
Find the firm’s short run total cost
Find the firm’s short run marginal cost.
Find the firm’s short run supply function.
The firm can sell its product at $60.
6. What is the profit maximizing output of the firm in the short run?
7. When producing the short run profit maximizing output, does the firm earn a profit, incur a loss or breaks even?
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