8. (Short-run vs long-run) Consider the following cost minimization problem min(L, K) rK + wL + F subject to q = K^(1/3) L ^(1/3) where F is unavoidable in the short run but avoidable in the long run. (a) Derive the cost functions for the short run and for the long run.
Q: How would the long-run equilibrium output change if the price level fell? Decrease, Increase or No…
A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…
Q: In the short-run, a tax increase Select an answer and submit. For keyboard navigation, use the…
A: Whren the government follows contractionary fiscal policy, the higher tax will result in income to…
Q: d. Suppose there are ten fringe firms instead of five. How does this change your results? e. Suppose…
A: (d) There were 10 fringe firm instead of 5. Q=400-2p MC=20+5q So, supply will Price= marginal cost…
Q: What are the four determinants of the demand of the Canadian dollar?
A: The urge to hold financial assets in the form of money is referred to as money demand. These…
Q: : An economy is described by the following equations: Z=C+l+G C=600+0.6(Y-T) I=300 G=700 T=600 ) :…
A:
Q: 1. Zaggy Zargawhoop has an idea for a new business. In order to develop his idea, he needs to invest…
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…
Q: The demand for Home output from foreign countries increased in an economy which was initially in the…
A: In an open economy, foreign consumers can make the demand for home output and the quantity sold to…
Q: Cost of a machinery is Rp 10 Billion and the economic life of the machinery is 20 year. Assuming the…
A: The cost incurred over time by the owner of a fixed asset or consumer durable as a consequence of…
Q: The table shows Wanda's total utility from ice cream and nuts. Ice Cream Nuts The price of an ice…
A: Total utility is the total satisfaction derived from consuming the good. Marginal utility is the…
Q: Consider a Common Value auction with two bidders who both receive a signal X that is uniformly…
A: Nash equilibrium refers to the strategy of dominant strategy which matches both player 1 and player…
Q: 1. Suppose that you are in charge of purchasing for a U.S. corporation that is planning to acquire a…
A: To analyze both the choices, the most effective way is gauge the genuine trade rates.
Q: ordered from poorest to richest, and Y is the cumulative percentage of income, then equality of…
A: For Gini Coefficient we need to find are A & Area (A +B ) . Where , area A =ar (A + B) - arB…
Q: What are the disadvantages of petrol subsidies?
A: Subsidy is a defined as the form of Government help which is provided to lower down the price of…
Q: Suppose Joe and Sarah each have a patent on their respective product: no other supplier can provide…
A: Given, Consumer Demand of Joe and Sarah :Qjoe=300-15Pjoe+10PsarahQsarah=300-15Psarah+10PjoeCosts…
Q: Please answer fast
A: The Phillips curve shows the inverse relationship between the inflation rate and the unemployment…
Q: Smith and Wesson are the only two residents in a small neighbourhood. They are considering hiring a…
A: Monthly value of security guard = $300 to Smith And to Wesson it's $100
Q: (d) Now if Aidan sells q2 JRTs, what is the total number of JRTs that will be sold? (e) What will be…
A: In the given scenario, adan is a leader one and the celina is a follower.
Q: 4. Conditions for monopolistic competition Consider the monopolistically competitive market…
A: In competitive and monopolistically competitive market there is free entry and exit of firms which…
Q: Characteristics of oligopoly An oligopolistic market structure is distinguished by several…
A: Oligopoly market is one of the forms of market where firms face difficulties in entry and exit.
Q: The human capital model of investment in an athlete's training incorporates both the costs and…
A: Since the question you have posted consists of multiple parts, we will answer the first two…
Q: 2. Jack is the owner of the only local bar in a small town. He sells whiskey in one-ounce glasses.…
A: Adam's demand function: yA=16-2p Burt's demand function: yB=8-p P = 4 .
Q: 4. Suppose a manufacturer and its retailer face the problem of double marginalization described in…
A: In all problems of double maximisation, the issue is that two vertical monopolists are involved, who…
Q: Which of the following statements is correct? Multiple Choice ___ Marginal cost is the change in…
A: Marginal cost is defined as the extra coat a firm incurs by employing an extra unit of input.
Q: A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the…
A: Given:- Marginal cost of mining diamond is constant at=$3000 per diamond.
Q: explains interest rate and its determinants. Please explain is 3 paragraph
A: The monetary payment made for the privilege of borrowing money is known as interest, and it is…
Q: Part B How should the persons be assigned to work with minimum cost? Consider the problem of…
A: The minimum amount due by you for the Schedule of Subject Premium, Reimbursable Losses, Deductible…
Q: Over the years, Americans have spent a smaller percentage of income on food and a larger percentage…
A: the paradox of value describes the vast difference seen in the prices of certain essential goods and…
Q: The figure shows the initial LRAS and SRAS curves. - Answer if the expected price is higher than,…
A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…
Q: Inflation Unemployment If the Phillip curve shows that unemployment is low and inflation is high in…
A:
Q: Suppose I know the production function: Q = F(K,L) = F(5, 10) = 200. The the average product of…
A: Average product of labor is equal to total product per unit of labor.
Q: Consider a modification of the Rock-Paper-Scissors game in which P2 is an expert in body language…
A: Given, The modification of the Rock-Paper-Scissors gamePlayer 2(P2) is an expert in body language…
Q: a. Optimal output b. Optimal price c. Total revenue
A: Given: In short-run: MC=ATC Note: Due to multiple subparts being posted, the first three subparts…
Q: The "winner's curse" refers to a situation where the winning bidder's net present value of the…
A: The winner's curse causes the winner to overpay on a bid, implying that they paid more than the…
Q: If climate change impacts (e.g., increased heat waves, droughts, wildfires, etc.) decrease the…
A: The Solow Model is an external economic expansion model that examines variations in an economy's…
Q: U = 340x1 +960x2 + 2x1x2 – 2x – /2, when the weekly amount of leisure is x1 = 132 and earned income…
A: Since you have posted multiple subparts, as per guidelines we can solve only the first 3 subparts.…
Q: Alice and Bob are playing a repeated game in which a certain stage game is played twice in…
A: In the above game , the stage game is played twice in succession . Stage game refers to the base…
Q: Alice and Bob are playing a repeated game in which a certain stage game is played twice in…
A: It is given that: Alice has 4 pure strategies and Bob has 3 pure strategies in the stage game
Q: Demand BA Quantity Refer to Externality graph above. Point A is the current equilibrium level of…
A: In the presence of externalities, there will be spillover cost or benefit to 3rd party who is not…
Q: : An economy is described by the following equations: Z=C+l+G C=600+0.6(Y-T) I=300 G=700 T=600 )…
A: Introduction Equation of an economy has given. Z = C + I + G C = 600 + 0.6 ( Y - T) I = 300, G =…
Q: World population growth rate from the 6th billion to the 7th billion shows a(n)- O Increasing at a…
A: The "population growth rate" is the rate at which the number of people in a population increases…
Q: Consider a firm who owns capital K and has the following production technology Y = zF(K, N)= 2K³N³,…
A: A production function is a mathematical equation that expresses the relationship between the number…
Q: The figure below shows a monopolistically competitive market for a fictional brand of shampoo called…
A: In a monopolistic competitive market, profit is maximised at a point where marginal revenue is equal…
Q: In your words describe and or explain the relation between savings and investment in an open market.…
A: an economy where goods and services are exchanged with different nations absent of any guidelines or…
Q: A monopoly has an inverse demand curve given by p=20−Q and a constant marginal cost of $2.…
A: Deadweight loss is the loss in social welfare resulting when socially efficient quantity is…
Q: QUESTION 4 Which areas represent producer surplus at market egulibrium? OA+B•C OD•EF QUESTION S…
A: equilibrium is achieved at a point where demand curve intersect the supply curve.
Q: FBI can impact the balance of payments of. (LO#4/5) Select one: O a. home country + MNCS O b. host…
A: Unfavourable disequilibrium in balance of balance is defined when payments is more than receipts.…
Q: Discuss "THE NORTHWEST PASSAGE" discovery and its significance to international trade
A: One of Canada's most exciting chapters of discovery, history, and exploration is the Northwest…
Q: Consider a monopolistically competitive market with NN firms. Each firm's business opportunities are…
A: As N rises, the demand for each firm's product: rise or fall ? We have Q = 100N - P As N increases,…
Q: A monopolist's demand curve: O is perfectly elastic. O is the same as the market demand curve. O is…
A: A monopoly is defined as a market structure in which there is only one seller, due to which it…
Q: Explain trade gains graphically and also split trade gains into exchange gains and specialization…
A: Gains from trade are graphically represented by the Production Possibilities Frontier (PPF) curve.…
Step by step
Solved in 7 steps with 7 images
- 3. (14 points) Let the production function be Q(K,L)=2K L. The cost of one unit of labor is w, the cost of one unit of capital is r, and the quanitity to produce is y. (a) (4 points) Set up the firm's cost-minimization problem, and clearly write down the con- Page 6 straint the firm faces. The cost minimization problem of the firm is min(KL) WL+rK. The constraint: y=2K!L!. anscribed Text (b) (5 points) What are two conditions that the optimal bundle L and K need to satisfy? Write down their expressions. Tangency: -=-; production: y = 2(K)! (L)!. (c) (5 points) Solve for the optimal bundle of L. and K that minimizes the firm's cost at y=144 by finding L and K", assuming that w $16 and r $81. By solving the system of two conditions in Part (b), it should be not that hard to get L = 162 and K* = 32.1. A firm' s short-run cost function for the production of gizmos is given by the following expression: C(y) = 10y² + 200y + 100000 a. Calculate the range of output over which it would be profitable for this firm to produce gizmos if it can sell each gizmo for $2400. Calculate the value of the output that maximizes this profit. b. Repeat these calculations and explain your results for the case where the short run cost function is given by: C(y) = 10y? + 200y + 200000A5 Course: Microeconomics - Cost and Production A firm produces shoes using L (labor) and machines (K). Its production function is Q = K1/3 L2/3. Assuming K fixed at 8, price of capital (r) is $4 and wage(w) is $2, find and plot the short-run cost curves. Also show that CMeT (AMC) reaches its value at the level of production where it equals Marginal Cost (MC). And show that CMeT (AMC) is ALWAYS decreasing at the beginning due to fixed cost. Demonstrations should use the necessary calculations.
- 2. Cost Functions: A firm operates with a production function, y = 4√lk and input prices Pe = 6 and Pk = 7. In the short run, capital is a fixed input, k = 36. (a) Find the firm's cost function, c(y), the minimum cost to produce a given amount of output. (b) In the long run, both labor and capital are variable inputs. Suppose that what will the firm do in the long run? What if the price is py: = 0.50?¹ = Py 20;12. If the demand function for a product is p = 100 – 2x where is price in dollars and x is the number of units sold, and the average cost function for a product is C(x) = 100 +4 where x is the number of units sold and C is dollars per unit, what is the maximum profit? Answer and Work Explanation of Work2. A firm producing hockey sticks has a production function given by: q = 2 vkl In the short run, the firm's amount of capital equipment is fixed at k = 100. The rental rate for k is v=$1, and the wage rate for / is w=$4. (a) Calculate the firm's short-run total cost curve. Calculate the short-run average cost curve. (b) What is the firm's short-run marginal cost function? What are the SC, SAC, and SMC for the firm if it produces 25, 50, 100 and 200 hockey sticks? (c) Where does the SMC curve intersect the SAC curve? Explain why the SMC curve will always intersect the SAC curve at its lowest point.
- COURSE: ECONOMY A company has a total cost function TC = 80+3q+2q2 and a marginal cost function MC = 3+4q. If market price is P = $30 and it is producing 10 units:(a) Is firm maximizing its profits?b) What quantity should it produce in long run? Hint: MC= ATCc) Construct a table with all costs.d) Plot profit maximization points in short and long run.1. Suppose marginal cost and average cost are given by the following expressions: MC(x)=3x1/2, AC(x)=2x1/2. What is the profit maximising quantity when p=$3?2. Suppose marginal cost and average cost are given by the following expressions: MC(x)=3x1/2, AC(x)=2x1/2. What is the value pf the long-run break-even price?3. For any given level of the price of output, the supply curve of a producer tells the producer the amount of output to produce in order to maximise profits a. True b. False15. Explain the following: a) Why would a U-shaped Average Cost (AC) curve result from a Total Cost curve TC = f(Q), where TC is initially concave and then convex. Assume that f(0) = 0. b) Why would the marginal cost (MC) curve intersect the U-shaped AC curve from below at the minimum point of AC, i.e., the MC curve lies below AC to the left of the minimum point on AC and MC lies above AC to the right of the minimum point on AC?
- 2.)Do fixed costs refer to the long run or short run? Why?3) Suppose that labor is the only variable input in the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal product of labor?4) What are economies of scale? What are economies of scope? What is the difference between the two?14.The demand function for a new product is p(x) = - 2x + 7 , where p is the selling price of the product and x is the number sold in thousands. The cost function is C(x) = x + 2 . a) Determine an equation for the profit, in standard form and in function notation. b) How many units must be sold for the company to break even?Question 4. [Costs - Short Run vs Long Run] Following is a firm's production function for soccer balls: q=√k₂l, where k₁ is the fixed amount of k(capital equipment) in the short run, and I is the amount of labor. a)) Calculate the firm's short-run total costs as a function of q, v, w and k₁ (where v = unit capital price; w= unit labor price) b)(ints) Given q, v, and w, how should the capital stock be chosen to minimize short-run total cost? c) d) ) Using your answer from b) above, calculate the long-run total cost of soccer ball production. For v=$1, w=$4, and k₁=100, at what level of q is short-run cost function tangent to the long-run cost function?