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Could you please explain this? Thank you! A firm produces chocolate G from labor and cocoa. It takes L0=10 hours of labor just to get
Could you please explain this? Thank you!
A firm produces chocolate G from labor and cocoa. It takes L0=10 hours of labor just to get the firm production-ready. Then L1 additional hours of labor and K tons of cocoa produce G=(L1K)1/3 tons of chocolate. 1. Write the production function G=f(K,L), where L is the total hours of labour used at the firm. 2. What is the cost function if cocoa costs 1 penny per ton and the salary rate is s pennies per hour? 3. Show that the firm will produce iff the price p of a ton of chocolate is at least as large as the minimum of the average cost. Write the corresponding inequality in terms of p and s. 4. Suppose that s is 80 pennies per hour. Compute optimal input demands and production as functions of p. Graph the supply curve of chocolate as a function of its price. A firm produces chocolate G from labor and cocoa. It takes L0=10 hours of labor just to get the firm production-ready. Then L1 additional hours of labor and K tons of cocoa produce G=(L1K)1/3 tons of chocolate. 1. Write the production function G=f(K,L), where L is the total hours of labour used at the firm. 2. What is the cost function if cocoa costs 1 penny per ton and the salary rate is s pennies per hour? 3. Show that the firm will produce iff the price p of a ton of chocolate is at least as large as the minimum of the average cost. Write the corresponding inequality in terms of p and s. 4. Suppose that s is 80 pennies per hour. Compute optimal input demands and production as functions of p. Graph the supply curve of chocolate as a function of its priceStep by Step Solution
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