Question: Show that the cost function c(w, y) of a competitive firm (example 2.31) is homogeneous of degree one in input prices w.

Show that the cost function c(w, y) of a competitive firm (example 2.31) is homogeneous of degree one in input prices w.

Step by Step Solution

★★★★★

3.51 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Suppose that x minimizes the cost of producing output at prices w ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

914-M-N-A-O (500).docx

120 KBs Word File

Students Have Also Explored These Related Numerical Analysis Questions!

Q:

Further, suppose that the cost function for providing minutes on the phone is given by c(x) = x2. The profit function is given by = k(x*) - C(x*), where x* is the optimal consumption given the...

Q:

An economist estimated that the cost function of a single-product firm is C(Q) = 50 + 25Q + 30 Q2 + 5 Q3 Based on this information, determine: a. The fixed cost of producing 10 units of output. b....

Q:

Division A's cost accounting records show that the cost of its product is $150 per unit-$100 in variable costs and $50 in fixed costs. The market price of the product, $160, barely covers Division...

Q:

Show that the cost function c(w, y) of a competitive firm (example 2.31) is concave in input prices w.

Q:

Two articles will be attached below in order to understand the question given. The main effects of Regulation Q Restrictions and technological changes on the scale economies for commercial banks. In...

Q:

Economics questions... . Suppose that a market is composed of two firms that simultaneously choose quantities. Firm 1 has 22 a cost function C1(q1) = q1^2. Firm 2 has a cost function C2(q2) =...

Q:

This question is about firms and cost functions, 1. [Duality in production theory] Consider a firm with production function q = VE, using one input (e.g., labor) to produce units of output q. The...

Q:

here are economics questions help me answer them all.its a complete kindly help mi.... Money in the Utility Function (Final, 2005) Assume that consumer's utility in period / depends on consumption...

Q:

economics here are my questions 5 Question 5: Caballero & Krishnamurthy (2006) - Welfare and Bubbles Consider the model in Caballero and Krischnamurthy (JME, 2006) that we studied in class. Compute...

Q:

1. (27 points) For each of the following production functions, sketch a representative isoquant (2 points). Calculate the marginal product for each input, and indicate whether each marginal product...

Q:

A coal-fired boiler produces superheated steam steadily at 1 MPa, 500C from the feed water which enters the boiler at 1 MPa, 50C. For a flow rate of 10 kg/s, determine. (a) The rate of heat transfer...

Q:

Net working capital is defined as: Answer current assets plus current liabilities current assets less fixed assets current assets less current liabilities current liabilities plus long-term liability

Q:

How can having more debt benefit a company? Debt is never beneficial for a company due to its increasing costs over time. It allows management to retain more control over the company. Interest...

Q:

Let the balance sheet of the bank be described by L + R + T = D + E, where L is the stock of loans, R is reserves, T is the stock of liquid assets, D is deposits and E is equity capital. Let the...

Q:

Let x and y be chosen at random from the interval [0, 1]. Show that the events x > 1/3 and y > 2/3 are independent events.

Q:

A coin has an unknown bias p that is assumed to be uniformly distributed between 0 and 1. The coin is tossed n times and heads turns up j times and tails turns up k times. We have seen that the...

Q:

In the spinner problem (see Example 2.1) divide the unit circumference into three arcs of length 1/2, 1/3, and 1/6. Write a program to simulate the spinner experiment 1000 times and print out what...

Q:

Consider the following code segment. Assume that index 1 is a number between 1 and LENGTH ( theList ) , inclusive, and index 2 is a number between 2 and LENGTH ( theList ) - 1 , inclusive.

Q:

A 9-year annuity of 18 $9,900 semiannual payments will begin 11 years from now, with the first payment coming 11.5 years from now. Requirement 1: If the discount rate is 8 percent compounded...

Q:

Which of the following must be considered before assessing the skills of equity fund managers? a. The average dividend payout ratios b. The P/E ratios of key market sectors c. The industry sectors...