5. Suppose the production function of a firm is y = 21 Where I is labor. Assume that the firm is a price-taker in the output market and the price of labor is w. a. Derive the cost function. b. Derive the demand function for l. c. Derive the supply function. d. Derive the profit function.

5. Suppose the production function of a firm is y = 21 Where I is labor. Assume that the firm is a price-taker in the output market and the price of labor is w. a. Derive the cost function. b. Derive the demand function for l. c. Derive the supply function. d. Derive the profit function.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 3PA

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Question

Explain all subparts b, c and d.

5. Suppose the production function of a firm is
y = 21
Where I is labor. Assume that the firm is a price-taker in the output market and the
price of labor is w.
a. Derive the cost function.
b. Derive the demand function for l.
c. Derive the supply function.
d. Derive the profit function.

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