Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Badgett's Gadgets produces gadgets with the production function, y=x 1 1/3 x 2 1/3 , where x 1 is the quantity of labor input, x

Badgett's Gadgets produces gadgets with the production function, y=x 1 1/3 x 2 1/3 , where x 1 is the quantity of labor input, x 2 is the quantity of capital input, and y is the quantity of output. In the short run, Badgett's capital input is fixed at x 2 0 =8, and so its short run production function is y=x 1 1/3 (8) 1/3 =2x 1 1/3 . The per-unit price of labor input is w 1 =20 and the per-unit price of capital input is w 2 =40. If Badgett's is a price taker in the output market and can sell as many gadgets as it wishes at a per-unit price of p, what is the lowest value of p at which Badgett's is willing to supply a positive quantity of output in the short run? Badgett's will supply a positive quantity of output of for any p>0. Badgett's will supply a positive quantity of output of for any p>120. Badgett's will supply a positive quantity of output of for any p>80. Badgett's will supply a positive quantity of output of for any p>40

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics

Authors: N Gregory Mankiw

9th Edition

1464182892, 9781464182891

More Books

Students also viewed these Economics questions

Question

2. Information that comes most readily to mind (availability).

Answered: 1 week ago

Question

3. An initial value (anchoring).

Answered: 1 week ago