A Cobb-Douglas production function for new company is given by FF(KK, LL) = KK3/5LL2/5 where K represents the units of capital and L represents the units of labor. Suppose units of labor and capital cost $200 and $100 each respectively. If the budget constraint is $30,000, find the maximum production level for this company.
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- Why CRS - Constant Returns on Scale would generate (1) No profit-maximizingproduction plan; the only nontrivial production plan involves zero profits. (2) Even when aprofit-maximizing plan exists, it is not unique?Al's production function for deer is f(x1,x2) = (2x1 + x2)^1/2, where x1 is the amount of plastic and x2 is the amount of wood used. If the cost of plastic is $4 per unit and the cost of wood is $3 per unit, then the cost of producing 5 deer is a) $55 b) $10 c) $50 d) $75The water Economist has estimated short run water responsiveness function for rice farming under major irrigation condition in the Dry Zone of "x" counry as follows;Y = 21W +30.3W2 – 3W3, Where Y = Output (paddy kg /Acre) , W = irrigation Water (Cubic Meter – m3) a) Determine three stages of this short run production process and graphically show the result. b) Determine rational production stage and what is the maximum and minimum output level of this rational stage. c) Determine the range of water level which is representing the low of diminishing marginal returns.
- (i) A business manager determines that t months after production begins on a new product,the number of units produced will be P thousand, where P(t) =6?2 + 5?(? + 1)2.What happens to production in the long run ?(ii) A ruptured pipe in a North Sea oil rig produces a circular oil slick that is y meters thick at adistance x meters from the rupture. Turbulence makes it difficult to directly measure thethickness of the slick at the source (where x = 0), but for x > 0, it is found thaty =0.5(x2 + 3x)x3 + x2 + 4x . Assuming the oil slick is continuously distributed, howthick would you expect it to be at the source?A decision maker wishes to maximum total benefit, B=3x+xy+y subject to the cost constraint C=4x + 2y=70. Set up the Lagrangian and then determine the values of x and y at the maximum level of benefit given the constraint, what are the maximum benefits?Using the annual data for the period of 2000 and 2010, Prof Omanya applied a Cobb -Douglas production function to estimate the production for the Kenya's manufacturing sector using firms listed on Nairobi Securities Exchange. His results were given as: Q= K0.45 L0.55 Where Q = units of output; L = units of Labor; and K = units of capital What are the marginal products of Labor and Capital? Calculate the factor intensity and explain the technique of production that is being used by Prof Omanya How would you characterize the Kenya's manufacturing sector in terms of returns to scale? What are the main three causes of such returns to scale? Explain three significance of returns to scale in Managerial decision making
- Using the annual data for the period of 2000 and 2010, Prof Omanya applied a Cobb -Douglas production function to estimate the production for the Kenya's manufacturing sector using firms listed on Nairobi Securities Exchange. His results were given as: Q= K0.45 L0.55 Where Q = units of output; L = units of Labor; and K = units of capital What are the marginal products of Labor and Capital? Calculate the factor intensity and explain the technique of production that is being used by Prof Omanya How would you characterize the Kenya's manufacturing sector in terms of returns to scale? What are the main three causes of such returns to scale?1. Suppose Firm A has a budget of P1.5 million pesos in outsourcinginputs, labor and machines, that would lend support in its 1 yearoperation. Suppose further that the cost of labor for 1 year is P150,000and for a machine is P200,000. If it decides to hire 6 laborers, howmany machines would it accept?DBM Industries produces exclusively an SP Juice in the market under the name DBM Sparkle . The firm’s manager must determine how many bottles to produce before he knows what the market price will be. Assume a competitive market situation. Forecast from the Department of Economics (DOE) revealed that, there is 30 percent chance that the market price will be P80 per liter and a 70 percent chance that it will be P40 per liter when the juice hits the market. If DBM’s cost function is C = 200 + .0005Q2, how much juice should DBM produce to maximize expected profit ? How much is the expected price?
- Out of 10000 people in a community, each is willing to pay Ksh 10 for each well dug. The cost of digging the wall is is given by C= Q2+20Q. Calculate the pareto efficiecy number of wells to be dug. If the government want to dug the well at a minimal cost, how many walls will it dig and how much will it spen if the projet is given to a private, profit making organization, how many well would the firm dig?Marginal revenue of a product is the incremental revenue of selling an additionalunit of that product. Let, the revenue of selling 20 units of a product beRs. 15,000 and the revenue of selling 21 units of the same product beRs. 15,085. Then, the marginal revenue of selling the 21st unit____?Critics of command-and-control policy often argue that regulationsare costly to business and industry, yet cost-benefitanalyses (p. 94) repeatedly show that regulations bring citizensmore benefits than costs, overall. Each year the U.S. Officeof Management and Budget assesses costs and benefits ofmajor federal regulations of administrative agencies. Resultsfrom the most recent report, covering the decade from 2003to 2013, are presented in the table (shown are averages fromranges of estimates). Subtract costs from benefits, and enterthese values for each agency in the third column. Divide benefitsby costs, and enter these values in the fourth column. For how many of the agencies shown do regulations exertmore costs than benefits? For how many do regulationsprovide more benefits than costs?