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Production Function

Cost Analysis : Solution set

Cost Analysis: Cost Analysis The fresh milk market in Honolulu is purely competitive. The typical production cost is defined by a a cubic cost schedule as shown below. Y C 0 200 1 397.06 2 518.48 3 582.62 4 607.84 5 612.5 6 614.96 7 633.58 8 686.72 9 792.74 10 970 Find (a) the cubic equation that describes the

MANAGERIAL ECONOMICS SAMUELSON

Making dresses is a labor-intensive process. Indeed, the production function of a dressmaking firm is well described by the equation Q=L-L^2/800, where Q denotes the number of dresses per week and L is the number of labor hours per week. The firm's additional cost of hiring an extra hour of labor is about $20 per hour (wage plus

MBA economics

Consider the production function Q=100L^.5K^.4. Suppose L=1 and K=1 so that Q=100. If L is increased 1 percent, that is to L=1.01 with the capital unchanged, what is the resulting percentage increase in output? Describe the nature of returns of scale for this production function.

MBA Economics: Returns to Scale

Consider the production function Q=10L-.5L^2+24K-K^2 for L and K in the range 0 to 10 units. Does this production function exhibit diminishing returns to each input? Does it exhibit decreasing returns to scale? Explain.

Calculating optimal amount of capital and labor

Suppose long run production for the firm is indicated by: Q=f(k,e) where: MPe=k-150 MPk=E-60 In addition, assume the firm's isocost equation is given by: C=wE+rK Where C=$240,000 r=$600 w=$800 1) Calculate the firm's optimal amount of capital and labor. 2) Suppose wages fall to w=$500. Calculate the firm's optima

Macroeconomics - Determine the level of Income Algebraically

Answer question 4 only in attached document. (AE = Total Spending, AP = Total Production or Total Output) (Hint: The equilibrium level exists where AE = AP. Graphically, this is expressed at the point of intersection between the AE and AP curves. In this problem, consumption spending is the only component of AE. Therefore,

Example of working with Total Cost Function

1. Determine a total cost function of transport services (e.g. road freight) as a function of volume of production. How you can derive now the average cost and the marginal cost of production? Why it is important to know and to be able to formulate average and marginal cost functions when we are interested in evaluating the na

output, revenues, costs, and profits

The Alex Co. uses two inputs, A and B, to produce boats. The production function for boats is given by Q = A^0.5 x B^0.5, (or the square root of A multiplied times the square root of B) and the marginal products of A and B are given by MPa = 0.5Q/A MPb = 0.5Q/B The prices of inputs are given by Pa = $10 and Pb = $10

marginal product of labor, MPL,

Given the following production function Q = F(K,L) = K^3/4 L^1/4 a) find an expression for the marginal product of labor, MPL, when the amount of capital is fixed at 16 units. b) Suppose capital is fixed at 16 units. If the firm can sell its output at a price of $100 per unit and can hire labor at $25 per unit, how many

Using Excel, calculate all cost curves

Cost Data Consider the following cost functions: TC = 20 + 4Q TC = 20 + 2Q + 0.5Q2 TC = 20 + 4Q - 0.1Q2 Using Excel, calculate all cost curves using a range of quantity from 0 to 15. Total cost Total fixed Cost Total variable cost Average total cost Average fixed cost Average variable cost Marginal cost

Enpar manufactures a single type of engine part for an automotive manufacturer.

Enpar manufactures a single type of engine part for an automotive manufacturer. It operates two plants, A and B, which have the following production functions: QA = 30 SA - 0.25 SA2 and QB = 40 SB - 0.5 SB2, where QA and QB denote the outputs of engine parts from each plant and SA and SB denote the amounts of steel used in each

Optimizing Product Mix

Optimizing Product Mix. California Products Company has the capability of producing and selling three products. Each product has an annual demand potential (at current pricing and promotion levels), a variable contribution, and an annual fixed cost. The fixed cost can be avoided in the product is not produced at all. This inf

point of diminishing marginal return

If a production function is given by the equation Q=12X+ 10x2- x3 where Q=output and X= input then provide the calculations for a. average product b. marginal product c. point of diminishing average returns d. point of diminishing marginal returns Note : the ten is supposed to be x-squared and the next one is supposed

Lagrangian cost minimization

The user capital in fact is 3% and not 3$. I don't know...3% of what? Please provide me with detailed step-by-step solutions thanks. A firm wants to minimize cost subject to its production function. Its labor cost is 10$ per person-hours and the user cost of capital is 3%. The firm wants to produce 50 units of output with the

Minimizing the Constraints

Please provide me with detailed explanations and solutions. A firm wants to minimize cost subject to its production function. Its labor cost is 10$ per person-hours and the user cost of capital is 3%. The firm wants to produce 50 units of output with the following production function 2K0.5L0.5. Use the Lagrangian function t

Principles of Economics in Decision-Making

1) The principles of economics influence your decision making, interaction with others, and the economy as a whole. Part I: Give one example of how you are personally affected by each of the three areas. Part II: How were these positive or negative effects? 2) List 3 characteristics of an economists, a scientist and 3

Superior Metals Company

Superior Metals Company has seen its sales volume decline over the last few years as the result of rising foreign imports. In order to increase sales (and hopefully, profits), the firm is considering a price reduction on luranium - a metal that it produces and sells. The firm currently sells 60,000 pounds of luranium a year at a

price-elastic demand curve

Soft Drink Bottling Data Total Product Labor Capital 245 250 30 240 270 34 300 300 44 320 320 50 390 350 70 440 400 76 520 440 84 520 440 86 580 450 104 600 460 110 600 460 116 log(TP) log(L) log(K) 2.389166084 2.397940009 1.477121255 2.380211242 2.431363764 1.531478917 2.477121255 2.477121255 1.643

True or False with short explaination

Please give a short explaination of why the problem is true or false. a. A firm maximizes its profit at the break even point. Break even point is the point where marginal revenue equals zero. True or false, explain. b. Firms advertise in order to change price elasticity of demand for their products. However, the higher el

Diminishing returns

Is the statement, "A manager should never employ another worker if this person causes diminishing returns" correct? Why or why not? If not, why? For a short run production function in which output is figured by the # of workers utilized(capital stock held constant) which is true? When there are few workers the marginal pr

Marginal product of labor & production function

Does the marginal product of labor measure how output changes as the wage rate changes, or is it the average product of labor divided by the quantity of capital stock and can it be negative or is it any two of the above? If so which ones? If a company is using a single variable input (labor) and a given amount of a single fixe

Principles of microeconomics

You have been hired by an unprofitable firm to determine wheter it should shut down its unprofitable operation.The daily wage(per worker)is 100$and the price of the firm's output is 30$.The cost of other variable input is 500$per day.Although you don't know the firm fixed cost, you know that it is high enough that the firm's tot

Profit Maximizing Solved

Here is a problem that I'm trying to solve: No reaction will result in the monthly demand and marginal revenue functions: P = $150-$0.1Q MR = $150-$0.2Q A major reaction will lead to the more elastic curves: P = $130-$0.4Q MR = $130-$0.8Q The total monthly cost for marketing this product is composed of $3000

Microeconomics - Introductory Course Level

The following table was calculated for an aluminum ingot producer. The table below illustrates the firm's daily short run production function along with the cost of 10 units of capital. The variable costs include only the cost of labour, and each worker is paid $200 each day. a) Calculate the marginal product of labour. b. C

I have the answer to the first problem but I dont know how to do #2 and #3

A firm has a technology described by the production function: q = 2.5 L1/4K1/2 where L is the number of labor units per period and K is the number of square feet of floor space and machines per period, and q represents firm output. The firm faces the following output and input prices on the market, and these are f

Financial Management

Please show work: The use of unit-based cost drivers has the following consequences: (a) simple products are undercosted (b) complex products are overcosted (c) (a) and (b) (d) none of the above. Please provide the correct answer.