5. Suppose the production function is given by f(E, K) = E'/³K²/3. The hourly wage rate is$2 and the price for a unit of capital is $32. The output level is ĝ = 144 and the price of theoutput is $30.(a) Write a firm's CMIN problem.(b) Impose FONC to find MP(E) = w and MP(K) = r.%3D (f) If the price is $30, how much will this firm's profit or loss be? Should the firm stay inbusiness or exit?

Every firm wants to earn maximum profit, to earn maximum profit firms minimize the cost of producing…

5. Suppose the production function is given by f(E, K) $2 and the price for a unit of capital is $32. The output level is q = 144 and the price o output is $30. The hourly wage ra (a) Write a firm's CMIN problem. (b) Impose FONC to find MP(E) = w and MP(K) =r. %3D

5. Suppose the production function is given by f(E, K) $2 and the price for a unit of capital is $32. The output level is q = 144 and the price o output is $30. The hourly wage ra (a) Write a firm's CMIN problem. (b) Impose FONC to find MP(E) = w and MP(K) =r. %3D

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.7P

See similar textbooks

Related questions

Q: Question 11 3 pt Assume that a firm spends $100 on two inputs, labor (graphed on the horizontal…

A: Given The firm spends $100 on the two inputs, labor and capital. Wage = 20 Rental cost of capital…

Q: 12. A firm uses capital and labour to produce widgets. In the short-run capital is fixed, while…

A: We are going to use single variable optimisation technique to answer this question.

Q: A firm's production function is: q = 16L1/2K1/3 where q is the firm's hourly total product, L is the…

A: Marginal product of labor (MP) can be calculated as follows.

Q: Suppose a firm is producing some output level q1 using a combination of capital and labor for which…

A: The cost minimization would result in the minimization of the total cost of production subject to…

Q: 1 3 Consider the production function f (x,,x,) = x+x; . Derive the marginal products of factor 1 and…

A: The given production function, fx1,x2= x114x234 The marginal products are determined by derivating…

Q: In a particular industry, labor supply is ES = 10 + w and labor demand is ED = 40 -4w, where E is…

A: Labor supply, ES = 10 + w Labor demand, ED = 40 – 4w

Q: Suppose a beverage company is profit-maximising. It has one factor of production, which is the…

A: Part: A → The firm will hire laborers until the value of the marginal product (VMPL) is not equal to…

Q: Roland Umbrellas has a production function given by Q = L0.5K0.5. The wage (W) is $80 per day and…

A: At optimal point, marginal rate of substitution is equal to the price ratio of two inputs used in…

Q: A producer has the following technology.y= 6K^(1/2)L^(1/2) a) Prove formally that the production…

A: Since you posted a question with multiple sub-parts, we will solve first three sub-parts for you. To…

Q: A country's Cobb-Douglas production function is as follows: Y= 5K^(1/2)L^(1/2). If this country has…

Q: Suppose the hourly wage is $2 and the price of each unit of capital is $5. The price of output is…

Q: Suppose a firm's production function is given by Q = 10L0.2 K (1-0.2) Wage rate is $10 and rental…

Q: Charlie's Umbrellas has a production function given by Q = L0.5K0.5. The wage (W) is $80 per day and…

A: There are many factor of production , Land and Labor is the part of those factor , here we calculate…

Q: Pizzas are produced using capital as a specific factor and labor as a mobile factor. The graph below…

A: Given that, Pizza is made with capital as a fixed factor and labour as a variable factor.

Q: Differentiate between the Iso quant and Iso cost. If Iso quant is represented by Y = L0.5K0.5. and…

A: A firm derives the maximum amount of profit (or minimum production cost) by choosing the combination…

Q: It deals with the Production Function, Marginal Rate of Technical Subsition . Problem: The…

A: The production is given as follows-

Q: Which of the following is NOT true? Marginal revenue product is calculated by dividing the change in…

A: Below is the calculation of total revenue: Total Revenue = Price × QuantityTR = P × Q

Q: (b) Identify the wage-rental ratio in a diagram with k on the horizontal axis and and W(k) on the…

A: Elasticity is a term used in economics to describe how the aggregate quantity demanded of a good or…

Q: This question involves the labor market for bakers in New York. Suppose that the bakeries all sell…

A: MRPL or Marginal Revenue Product of Labor is given as the product of cost and marginal productivity…

Q: A company is currently using its two inputs L and K, where MPL - 3.2K04L 0.2 and MPK - 1.6K -0.610.8…

A: Marginal product of labor measures the change in the output level when the labor changes by the one…

Q: Charlie has a repair shop that uses three inputs: Unskilled Labor (quantities of which will be…

A: Given information Production function Y=L1/6H1/3K1/2K is unit of machine which is fixed at 1 unitWL=…

Q: In this problem a firm's production function depends only on labor, L: outp equals (L – aL²). The…

A: Given:

Q: Answer the attached question

A: Production function shows a technical relationship between the numbers of inputs used to produce…

Q: Suppose we have a production function f(L, K) = L}K} 4а. Find the marginal product of labor. Explain…

A: Note:- Since we can only answer up to three subparts, we'll answer first three. Please repost the…

Q: Let L represent the number of workers hired by a firm and let Q represent that firm’s quantity of…

A: Production function shows different combinations of labor and output produced using labor

Q: 10.Consider a price-taking firm that has total fixed cost of $50 and faces a market- determined…

A: Given:- Fixed cost=$50 Wage rate=$10 per labor unit Market determined price=$2 To calculate:- Part…

Q: A firm produces its product using only labor. Its production function is Q= 20L -L, where Qis the…

A: Given information- Production function- The wage rate is equal to $12/hour. And the market price is…

Q: Suppose the firm's production function is Q = K¹/3L2/3, where the MPK = [2/3 and MPL 3K-2/3 13…

A: The Firm's Production function Q=K1/3L2/3 where MPk=L2/33K2/3 and MPL=2K1/33L1/3 This Production…

Q: = 2L + K. The wage for a Suppose that a firm has the following production function: q worker is w =…

A: The following problem of minimization of cost is solved as follows:

Q: Consider the long-run cost minimisation problem, with L on the horizontal axis and K on the vertical…

A: A firm will minimise its cost at a point where marginal rate of technical substitution is equal to…

Q: Consider a firm for which production depends on two normal inputs, labor and capital, with prices w…

Q: In an economy with production function Y = 1.5 ×KOL07,K= 343, and L = 512. If factor markets are in…

A: In economics, a production function gives the technological relation between quantities of physical…

Q: 6. Suppose the hourly wage is $40, the price of each unit of capital is $50, and the price of output…

A: Note: There are multiple sub parts of the given question, therefore we shall answer only the first…

Q: Maria's Umbrellas has a production function given by Q = L0.SKO.5. The wage (W) is $80 per day and…

A: Maximization occurs when the following relation is fulfilled MPL/MPK = w/r

Q: Suppose the hourly wage is $10 and the price of each unit of capital is $25. The price of output is…

A: The production function is, f(E, K) = E 1/2K 1/2 The marginal product of labour is, MPE = (1/2)(K/E)…

Q: When the wage rate falls, profit-maximizing firms have an incentive to stop using capital production…

A: A profit-maximizing firm is a firm that is producing at a point when the marginal cost is equal to…

Q: 2. Which of the following statements is true? a. The labor supply curve is the sum of all the…

A: Labor supply curve is the horizontal sum of individual marginal dis-utility, so (a) is false. Hiring…

Q: 1. Wiget factory Inc.in Wisconsin has the folowing production function: FILK) = 21 2 K1/2 L…

A: here we calculate the profit rate by solving the equation as follow- Profit = TR-TC profit rate (…

Q: A firm produces at an output level where the marginal product of labor (MPL) is 50 units and the…

A: A firm either maximizes profit or minimizes cost and hence it follows that any firm should follow…

Q: n the short-run, we assume that capital is a fixed input and labor is a variable input, so the firm…

A: The additional output produced as a result of increased input placed into a business is known as the…

Q: Consider a two-sector economy that employs a total of 105 units of a single input, labor. Nyof these…

A: Given: Number of units=105 Sector 1: Wage for top 5 workers =50 Wage for others=0 Sector 2: Wage for…

Q: Suppose that this conveyor-manufacturing firm has another location and would like you to evaluate…

A: Answer: Given, Marginal rate of technical substitution (MRTS) = 0.5 The marginal product of labor at…

Q: A firm produces output that can be sold at a price of $10. The production function is given by Q =…

A: Given, Q = K1/2L1/2 Also, p= 10, capital(K)= 1 and wage rate(w) = 2 are given. Now, Profit = pQ - wL…

Q: Imagine that the markup practiced by firms in an economy is 5% The degree of the protection of…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: 2. A production function is given by the equation Q = 100L04K0.6 Where L is the number of labour…

A: Given; Production function; Q=100L0.4K0.6 where; L= Quantity of labor units. K= Quantity of capital…

Q: The robot bar below leads to: 035 A. Increases in total output, but with temporary job losses for…

A: From enticing new cafés to exemplary Royal Caribbean contributions, Ovation of the Seas has feasting…

Q: Suppose demand for labor is given by the equation P = 75 – 20 and the supply for labor is given by…

Question

5. Suppose the production function is given by f(E, K) = E'/³K²/3. The hourly wage rate is
$2 and the price for a unit of capital is $32. The output level is ĝ = 144 and the price of the
output is $30.
(a) Write a firm's CMIN problem.
(b) Impose FONC to find MP(E) = w and MP(K) = r.
%3D

(f) If the price is $30, how much will this firm's profit or loss be? Should the firm stay in
business or exit?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.