Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help with this question. thank you A firm produces cellphones (y) with two factors of production: labor (l) and capital (k). Its technology is

Need help with this question. thank you

A firm produces cellphones (y) with two factors of production: labor (l) and capital (k). Its technology is represented by the production functiony=lk2.

(a) Represent graphically the isoquants of levels 1, 2, and 3. Does this technology exhibit increasing, constant, or decreasing returns to scale? Why?

(b) Suppose that the prices of the inputs are 10 and 100 dollars, respectively. If the firm wants to produce one I-phone, how many units of labor and how many units of capital should it hire? How much will it cost? What if the firm wants to produce two cellphones?

(c) Derive the conditional factor demands.

(d) Derive the long run cost function of this firm if the factor prices are the ones given above. Derive the long run average cost function and the long run marginal cost function. Graph the average and the marginal cost functions.

(e) Suppose the amount of capital is fixed at 1 unit. What is the short run production function? Derive (for the given prices) the short run cost function. Derive and represent graphically the average variable cost, the average total cost, and the marginal cost functions.

(f) Derive the long-run and short-run supply curves for the firm.

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

Energy, Foresight And Strategy

Authors: Thomas J Sargent

1st Edition

1317329686, 9781317329688

More Books

Students also viewed these Economics questions

Question

What does this look like?

Answered: 1 week ago