A firm produces output that can be sold at a price of $10. The production function is given by Q = F(K, L) = K²L12 If capital is fixed at 1 unit in the short run, how much labor should the firm employ to max- imize profits if the wage rate is $2?
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- A firm produces output that can be sold at a price of $10. The production function is given by Q = F(K, L) = K1/2 L1/2 If capital is fixed at 1 unit in the short run, how much labor should the firm employ to maximize profits if the wage rate is $2?A competitive firm produces output using three fixed inputs and one variable input. The firm’s short-run production function is q = 200x − 3x^2, where x is the amount of variable input used. The price of the output is $5 per unit and the price of the variable input is $10 per unit. In the short run, how many units of x should the firm use?Your company operates with a technology that is characterized by a diminishing rate of technical substitution of labor for capital. Your firm is currently producing 64 units of output using 8 units of capital and 10 units of labor. At that operating point the marginal product of labor is 8 and the marginal product of capital is 4. The rental price of a unit capital is $4 and the wage rate is $2 Is your firm minimizing the total long-run cost of producing the 64 units of output? If so, how do you know? If not, show why not and indicate whether the firm should be using more capital and less labor, or less capital and more labor to produce an output of 64.
- For a short run production function q=10lnL if L=5 and wage 3, more workers will be hired if the price at which the output can be sold is more than.......The production function for a product is given by q= 10K^(1/2)L^(1/2) where K is capital, and L is labor and q is output. a) Find the marginal product of labor and the marginal product of capital. b) Find the marginal rate of technical substitution between labor and capital. c) Denote the wage of labor by w and the rental of capital by r. What is the cost minimization condition for a firm? Show it diagrammatically. d) Now suppose w =30 and r = 120. What is the minimum cost of producing q=1000. (You must show your work by clearly writing the equations that you use to derive the cost minimizing levels of L and K.) Part A, B, CA firm produces output y using two factors of production (Inputs), Labour L and capital K. The firm's production function is f(L,K) = 1/2 In(L) + 1/2 In(K) . The wage rate w=4 and the rental price of capital r=4 are taken as parameters (fixed) by the firm. Solve the firm''s long run cost minimization problem (minimize costs subject to the output constraint ) to derive the firm's demand function for labour L = L(y) and for capital K =K(y) , and the firm's long run total cost function C=C(y).
- 1.XYZ Co. operates in a competitive market. Its production function is q = LαKβ. The firm takes the wage, rental rate and price as given. a) Derive the firm's conditional labor and capital demand functions. b) How does the firm react to an increase in the wage rate? c) Derive the firm's cost function.A widget manufacturer has a production function of the form q = 6L + 10K . If the wage rate (w) is $4 and the rental rate on capital (r) is $5. Are the returns to scale increasing, constant, or decreasing for this production function? What cost minimization combination of K and L will the manufacturer employs to produce 300 units of output? Suppose that the price of capital increases to $7 per unit. If manufacturer continues to produce 300 units,what cost minimization choice of inputs capital and labor should the firm used. Suppose that the capital input is fixed at K = 3 units in the short run, what is the short run total cost function with qThe production function for a product is given by q = 10 K1/2L1/2 where K is capital, and L is labor and q is output. a) Find the marginal product of labor and the marginal product of capital. b) Find the marginal rate of technical substitution between labor and capital. c) Denote the wage of labor by w and the rental of capital by What is the cost minimization condition for a firm? Show it diagrammatically. d) Now suppose w =30 and r = 120. What is the minimum cost of producing q=1000. (You must show your work by clearly writing the equations that you use to derive the cost minimizing levels of L and K.) e) Now suppose that the firm is in the short run and cannot vary the amount of capital. That is, it must use the same amount of capital as in part d. However, the firm wants to produce 1200 units of output. How much labor should it use to minimize its cost and what is the minimum cost of producing q =1200?