A firm's short-run production function is q=3L0.2 , while its cost function is C = 2L. Furthermore, the firm can sell its output in a perfectly competitive market at p = 40. 6.1 Find the value of the firm’s profit when L = 50 . 6.2 Calculate the level of L that satisfies the first-order condition for profit maximization. 6.3 Calculate the value of the second order derivative (SOD) that ensures profit is being maximised at the value of L found in 6.2 .
A firm's short-run production function is q=3L0.2 , while its cost function is C = 2L. Furthermore, the firm can sell its output in a perfectly competitive market at p = 40. 6.1 Find the value of the firm’s profit when L = 50 . 6.2 Calculate the level of L that satisfies the first-order condition for profit maximization. 6.3 Calculate the value of the second order derivative (SOD) that ensures profit is being maximised at the value of L found in 6.2 .
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
ChapterB: Differential Calculus Techniques In Management
Section: Chapter Questions
Problem 5E
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A firm's short-run production function is q=3L0.2 , while its cost function is C = 2L.
Furthermore, the firm can sell its output in a
6.1 Find the value of the firm’s profit when L = 50 .
6.2 Calculate the level of L that satisfies the first-order condition for profit maximization.
6.3 Calculate the value of the second order derivative (SOD) that ensures profit is being
maximised at the value of L found in 6.2 .
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