Question

Question 1: A firm produces one good with a technology given by the production function y...

Question 1: A firm produces one good with a technology given by the production function y = f (x) = x1/3. The factor price w and the price p for the good are fixed.

a) Explore whether the production function exhibits increasing returns to scale.

b) Determine the cost function

c) Determine the demand function for the input factor.

d) How much will the firm produce?

Homework Answers

Answer #1

Please drop a thumbs up if you found this answer helpful. Thanks!

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
Consider a firm whose production technology can be represented by a production function of the form...
Consider a firm whose production technology can be represented by a production function of the form q = f(x1, x2) = x α 1 x 1−α 2 . Suppose that this firm is a price taker in both input markets, with the price of input one being w1 per unit and the price of input two being w2 per unit. 1. Does this production technology display increasing returns to scale, constant returns to scale, decreasing returns to scale, or variable...
Consider the technology of production f(K,L) = 0.3log(x) + 0.3log(y) a) Check whether the production function...
Consider the technology of production f(K,L) = 0.3log(x) + 0.3log(y) a) Check whether the production function exhibits constant, decreasing or increasing returns to scale. Explain b) Find the conditional demand functions. Use (p1, w1, w2) to denote the exogenous prices of output x1 and x2 respectively c) Find the cost function and verify Shephard's lemma d) Find the profit function
production function Consider a firm that produces a single output good Y with two input goods:...
production function Consider a firm that produces a single output good Y with two input goods: labor (L) and capital (K). The firm has a technology described by the production function f : R 2 + → R+ defined by f(l, k) = √ l + √ k, where l is the quantity of labor and k is the quantity of capital. (a) In an appropriate diagram, illustrate the map of isoquants for the firm’s production function. (b) Does the...
A firm uses two inputs x1 and x2 to produce output y. The production function is...
A firm uses two inputs x1 and x2 to produce output y. The production function is f(x1, x2) = (x13/2+ x2)1/2. The price of input 1 is 1 and the price of input 2 is 2. The price of output is 10. (a) Calculate Marginal Products for each input. Are they increasing or decreasing? Calculate Marginal Rate of Technical Substitution. Is it increasing or diminishing? (b) Draw two or more isoquants. Does this production function exhibit increasing, decreasing or constant...
1. A firm has two variable factors of production, and its production function is f(x1,x2) =...
1. A firm has two variable factors of production, and its production function is f(x1,x2) = x1/2 1 x1/4 2 . The price of the output is 6. Factor 1 receives the wage $2, and factor 2 receives the wage $2. a. How many units of each factor will the firm demand? b. How much output will it produce? 2. Beth produces software. Her production function is f(x1,x2) = 3x1 + 2x2, where x1 is the amount of unskilled labor...
Consider a competitive firm operating in the short run with a production technology that uses a...
Consider a competitive firm operating in the short run with a production technology that uses a single variable factor that exhibits increasing then diminishing marginal productivity. Over the range of output where the marginal cost of producing output exceeds the average variable cost of producing output, then which of the following must be necessarily true in the short run? a) Average fixed costs (AFC) are increasing. b) Marginal costs (MC) are increasing. c) Average variable costs (AVC) must be decreasing...
Suppose the production function for widgets is given by: q = kl – 0.8k2 – 0.2l2,...
Suppose the production function for widgets is given by: q = kl – 0.8k2 – 0.2l2, where q represents the annual quantity of widgets produced, k represents annual capital input, and l represents annual labor input. Which of the following statements is correct? a. The widget production function exhibits constant returns to scale. b. The widget production function exhibits increasing returns to scale. c. The widget production function exhibits decreasing returns to scale. d. The widget production function is homogeneous...
Answer the following questions about the producer’s production function: Q = 2K1/2L2 Does the production function...
Answer the following questions about the producer’s production function: Q = 2K1/2L2 Does the production function display increasing, constant, or decreasing returns to scale? [Prove your answer by increasing all inputs by a factor of c in your analysis.] Find MPL if capital is fixed at K0=9 and determine whether the production process follows the law of diminishing returns (LDR) to labor. If input prices are r=5 and w=4 for capital and labor, respectively, and suppose MPK=40 and the firm...
A firm’s production function is given as y=(x1)^(1/2) * (x2-1)^(1/2) where y≥0 for the output, x1≥0...
A firm’s production function is given as y=(x1)^(1/2) * (x2-1)^(1/2) where y≥0 for the output, x1≥0 for the input 1 and x2≥0 for the input 2. The prices of input 1 and input 2 are given as w1>0 and w2>0, respectively. Answer the following questions. Which returns to scale does the production function exhibit? Derive the long-run conditional input demand functions and the long-run cost function.
Suppose the aggregate production function is given by Y = K0.5L0.5. Does it have increasing, decreasing...
Suppose the aggregate production function is given by Y = K0.5L0.5. Does it have increasing, decreasing or constant returns to scale? Show that the marginal products of capital and labour are declining. Show that they are increasing in the input of the other factor.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT