Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The firm's profit can be given by the profit function (x) = Px - C(x) = Px - 0.5cx 2 - F, where P is

The firm's profit can be given by the profit function (x) = Px - C(x) = Px - 0.5cx2 - F, where P is the product price. Assume that the firm is maximizing its profits.

a. Find the firm's adaptation

b. Find an expression for the firm's profit as a function of the product price P, the parameter c and the fixed costs F.

Show the effects on optimal production and the firm's profits by

c. Product price P increases

d. Product price P and the parameter c increase with the same percentage

e. Fixed costs F increases

----

a. My solution: x = p/c

b. My solution: P = (0.5p2)/c - F

c., d. and e.: How should I solve this? Should I take the profit function given and the other function from b. and plot in some numbers and see what happens? Or is it possible to solve this graphically?

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_2

Step: 3

blur-text-image_3

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

Local Disaster Resilience Administrative And Political Perspectives

Authors: Ellen Russell, Ashley D Ross

1st Edition

1135910618, 9781135910617

More Books

Students also viewed these Economics questions