A firm has a production function Q in function of K and L that can be written as follows: Q = 2/K/L Let say P is the price of Q, w is the wage and r is the capital cost. A- How many labor that the firm must employ if K = 4. B- Find the firm's profit when P = 2, w = 1 and r = 2. C- We give up the hypothesis that K is fixed. Write the equation of the firms' expansion path.

A firm has a production function Q in function of K and L that can be written as follows: Q = 2/K/L Let say P is the price of Q, w is the wage and r is the capital cost. A- How many labor that the firm must employ if K = 4. B- Find the firm's profit when P = 2, w = 1 and r = 2. C- We give up the hypothesis that K is fixed. Write the equation of the firms' expansion path.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.3P

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