Question: 3. (35 points) A firm has a production function given by f($1, 12) = ]1;, where I] and I2 are the two inputs used to

3. (35 points) A firm has a production function given by f($1, 12) = ]1;, where I] and I2 are the two inputs used to produce output y. Let the price the firm pays per unit of input 1 be wi, and the price the firm pays per unit of input 2 be w2. The firm is planning to produce y units of output.Short-run profit-maximization: In the short-run, the firm uses a2 units of input 2 and is unable to vary this quantity. In the short-run, the only thing that is left for the firm to choose is the amount of input 1. Let the price of the firm's output be p, and, once again, let the price the firm pays per unit of input 1 be wi, and the price the firm pays per unit of input 2 be w2. (c) Derive the firm's short-run demand function for input 1 and its short-run supply function. (d) Explain what happens to the short-run profit-maximizing production plan as the output price p decreases. Present graphically the short-run demand function for input 1 and show on the graph what happens to the quantity demanded when p decreases. (e) Given than w1 = w2 = $1, p = $9 and 12 = 27, find the firm's optimal level for input 1 and its optimal short-run output level. Calculate the firm's maximum short-run profit level

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock 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

Students Have Also Explored These Related Economics Questions!

3. (35 points) A rm has a production function given by f (31,12) = :ri'rii, where .11 and I2 are the two inputs used to produce output 1;. Let the price the rm pays per unit of input 1 be an, and the...

Question B 3. (35 points) A firm has a production function given by f(31, 12) = rr,, where r, and r2 are the two inputs used to produce output y. Let the price the firm pays per unit of input 1 be...

i need help with the following 3. (35 points) A firm has a production function given by f($1, 12) = ]1;, where I] and I2 are the two inputs used to produce output y. Let the price the firm pays per...

l r _ 3. (35 points) A rm has a production function given by f (1'1, $2) = 2:13 2:3, Where an and 1'2 are the two inputs used to produce output y. Let the price the rm pays per unit of input 1 be ml,...

For this question, assume that the firm has a production function given by f( 21, Z2) = 221 21/3 -213 Answer the following: Write your answers to 3 decimal places. a) (0.5 point) Calculate the TRS1,2...

Solve the following.,,, Question 1 (total 15 points). A firm has a production function: f(K, L) = 50LK0-5 + 12 K2 - 13K3 a. What is its short-run production function if capital is fixed at K=4? b....

Answer asap 4. (12 marks) A firm has a production function given by f(11, 12) = rar, which is a convex production set. (a) (2 marks) Given factor prices w1, W2 > 0 and output price p > 0, set up the...

Hello, I will give you $100 if you can solve the entire problem in one hour: it is urgent. Contact me at eleanora.omaley @ g mail.com A firm has a production function given by f(x1; x2) = x 1 1/3 x 2...

Answer the following Topic 6 The following is an accounts receivable aging schedule for Caulfield Lid on 30 June 2019. Customer Total Number of days past due 1-30 31-60 61-90 Over 90 Bela 18,000...

Explain the following attachments. A1. Assume that Canada is an importer of televisions and that there are no trade restrictions. Canadian con- sumers buy 1 million televisions per year, of which 400...

Visit the websites of at least three major carriers in the U.S (American Airlines, Delta Airlines, United Airlines, etc.). locate the companys annual report, also known as the 10k report, for each...

Janelle is planning to rent a car while on vacation. The equation C=0.32m+15 models the relation between the cost in dollars, C, per day and the number of miles, m, she drives in one day. Find the...

Subscription rights typically expire after four to eight: A Days Weeks Months Years

Explain Nike's business strategy and why it is successful? Support your answer by using Nike's capabilities and resources.

7. Also complete the following sentence: This core value is important to me when I ________________________. This is the situation this core value is important to you we are looking for here.

9. What type of competence is important to have and develop in order to strengthen the core value you want others to associate with you?

6. Identify a core value that is important to you and that you would like to strengthen in yourself. Write down this core value. Then complete the follow-ing sentence: This core value is important to...