Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help Question 2 (10 points) Consideraperfectlycompetitivefirmwithshortrunproductionfunctionequaltoq=5 . a) Call the market price P and the unit wage L and find the expression of the

please help

Question 2 (10 points)

Consideraperfectlycompetitivefirmwithshortrunproductionfunctionequaltoq=5 .

a) Call the market price P and the unit wage L and find the expression of the firm's labor demand.

b) Show that if the market price is P = 2 and the unit wage is w = 5 the firm should produce q* = 5 to maximize profit.

c) Now find the firm's short run conditional demand for labor and short run total cost.

d) Suppose the firm had fixed cost FC = 10. In the short run, should it stay open or shut down? Clearly justify your answer.

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

The Chinese Economy Transitions And Growth

Authors: Barry Naughton

1st Edition

0262640643, 9780262640640

More Books

Students also viewed these Economics questions

Question

What were the processes that caused the outcomes?

Answered: 1 week ago

Question

(1), 4761.

Answered: 1 week ago