A firm has production function q= L 1/3 K 1/3 We assume that: w=1 r=1 K=1 a)
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Question:
A firm has production function q= L1/3 K1/3
We assume that: w=1 r=1 K=1
a) Suppose this firm is a price taking firm
Show that the firm breaks even with (=0) when price is P=3(321)2
b) Suppose that firm is a monopoly:
The market demand function is P=90 - 23 Q
As a single price monopoly, show that the firm's maximum profit is =286.5
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