Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

HelloCan you give me the answers of this exercise? 1. Consider a Cobb-Douglas production function given by Q = 10.4104. The cost of a unit

image text in transcribed

HelloCan you give me the answers of this exercise?

image text in transcribed
1. Consider a Cobb-Douglas production function given by Q = 10.4104. The cost of a unit of labor is w = 16 and the unit cost capital is r = 4. (a) Set-up the firm's cost minimization and find the conditional demands for labor and capital. (b) Find the firm's long-run cost function. Find the average cost curve and the marginal cost curve. If the long-run price P - 32, how many units will this firm produce? What is its profit? (d) Suppose that, in the short-run, capital is fixed at K, units. Find the short-run cost function. Find the short-run marginal and average cost curves. (e) Find the short-run profit maximizing quantity (as a function of price and K1) if the firm is operating in a perfectly competitive economy and takes prices as given. If K1 = 20 and P = 1, find the optimal quantity and the profit. Will the firm choose to produce at this price? (f) Is there a range of prices at which the firm will not operate

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

Step: 3

blur-text-image

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

Foundations Of Global Financial Markets And Institutions

Authors: Frank J. Fabozzi, Frank J. Jones, Francesco A. Fabozzi, Steven V. Mann

5th Edition

0262039540, 978-0262039543

More Books

Students also viewed these Economics questions

Question

Discuss the different types of risks in foreign exchange markets.

Answered: 1 week ago

Question

An improvement in the exchange of information in negotiations.

Answered: 1 week ago

Question

1. Effort is important.

Answered: 1 week ago