Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help ASAP Questions 3 and 4 refer to a profit-maximizing price-taking firm in both its input and output markets. The firm produces a single

Please help ASAP

image text in transcribed
Questions 3 and 4 refer to a profit-maximizing price-taking firm in both its input and output markets. The firm produces a single output Q according to the production function Q = f(L, K) = 100 + 30 x In L + 20 x In K Question 3 In the initial situation, labour is paid an hourly wage rate w = $6. 00 and the hourly rental cost of capital is r = $10.00. The firm sells its product at a price P = $4.00 per unit of output Q. A. The Hessian determinant evaluated at the profit-maximizing input combination (L, K) is 0.375 B. The profit-maximizing input combination is (L, K) = (8,20) C. The marginal physical product of labour is 30 D. The most profitable output level is Q = 100 E. The value of the marginal physical product of labour is 120 Question 4 Inflation engenders a situation where all the prices have doubled. As a result, w = $12. 00, r = $20.00, and P = $8. 00 What is the profit-maximizing input combination in this new situation? A. (L, K) = (20, 8) B. A corner solution C. (L, K) = (8,20) D. Prices are too high for the firm to be profitable E. Inflation distorts relative prices

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

Marketing

Authors: Shane Hunt

3rd Edition

1260800458, 9781260800456

More Books

Students also viewed these Economics questions

Question

Do not get married, wait until I come, etc.

Answered: 1 week ago

Question

Do not come to the conclusion too quickly

Answered: 1 week ago

Question

Engage everyone in the dialogue

Answered: 1 week ago