b Now suppose Q = 2L +3K. Let the market price of L be w = 5 and the price of K be r = 4. Let both L andK can vary with production. Compute the input demand functions as a function of Q. (4 Points)c Calculate the marginal cost and average cost of the above function in subpart (b). Show them graphically. Atwhat prices of textile will the producer shut down production. (3 Points)d Now suppose Q=10LK. The market prices of inputs are as in subpart (b) above. Compute the inputdemand functions as a function of Q. Find the optimal production when the price of textile is $10 per yarn.(5 Points)

b) Suppose the production function is Q = 2L + 3K, where Q represents the output quantity, L is the…

Answered: b Now suppose Q = 2L +3K. Let the…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 5E

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Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) A.Determine the company’s total profit function. Also, (i) What are the profit maximizing levels of price and output for the two markets? (ii) Calculate the marginal revenues in each market. B.Now consider two cases: (i) Company is effectively able to price discriminate in thetwo markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging thesameprice in the two markets what are the profit maximizing levels of price,output, and the total profits?…

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