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Production function: Q(L,K)=L^1/4K^3/4 w=10 per hour, r=5000/unit K=20 Market demand function:Q=350-20P competitive market with one firm representing output market find sr, lr output supply curve
Production function: Q(L,K)=L^1/4K^3/4
w=10 per hour, r=5000/unit
K=20
Market demand function:Q=350-20P
competitive market with one firm representing output market
- find sr, lr output supply curve
- find sr equilibrium price and quality for input, output
- find lr equilibrium price and quality for input, output
- gov decides subsidize price becomes 25, explain welfare effect for each side and total welfare
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