A firm produces TVs and ovens with a joint cost function that takes the form: C(x,y) = 3x^2 + 2y^2 + 2xy where x and y are the firm's output of TVs and ovens respectively. Suppose the cost function is subject to the constraint on the total output of the firm in the form 2x + y = 35. a) Find the optimum values x and that minimize the firm's total cost. b) Check your answer in (a) by using the bordered Hessian matrix. c) Determine the optimum value of the Lagrange multiblier À. Interpret your answer.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.3P
icon
Related questions
Question

Y6

questions
1. A firm produces TVs and ovens with
a joint cost function that takes the form:
C(x,y) = 3x^2 + 2y^2 + 2xy where x and y are the firm's output of TVs and ovens
respectively. Suppose the cost function is subject to the constraint on the total output of
the firm in the form 2x + y = 35.
a) Find the optimum values x and that minimize the firm's total cost.
b) Check your answer in (a) by using the bordered Hessian matrix.
c)
Determine the optimum value of the Lagrange multiblier À. Interpret your answer.

 

 

Expert Solution
steps

Step by step

Solved in 5 steps

Blurred answer
Knowledge Booster
Expected Utility
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Microeconomics
Microeconomics
Economics
ISBN:
9781337617406
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning