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- (Maple) The output, Q, of an Internet firm depends in the short term on capital, K, and time, t. The production and savings functions are given by Respectively, where a and b are positive constants. Assuming that capital accumulation is equal to savings, show that If the initial capital is c, solve this equation to obtain an expression for K in terms of t and the constants, a, b and c. Write down the corresponding expression for Q. Comment on the qualitative behaviour of this solution in the case whenA firm is considering an investment that will earn a 6 rate of return. If it were to borrow the money, it would have of pay 8 interest on the loan, but it currently has the cash, so it will But need to borrow. Should the firm make line investment? Show your work.If pMP1>w1pMP1>w1 and you want to increase profits, should you increase, decrease or maintain the level of factor 1?
- What does Tobin's q tell us about what determines a firm's investment decision?According to the the Tobin's q, when should a firm invest?Suppose that the XYZ Corp. (which is a profit-maximizing enterprise) produces “gadgets” according to the following production function: Q = 300K + 100KL + 2000L - L^2 , where Q is the number of gadgets per year, K is the amount of capital (machines) that are used, and L is the number of workers employed per year. Gadgets sell for $100 each. a) If XYZ has 10 machines, and workers cost $100,000/year (including benefits and direct ancillary expenses), how many workers should XYZ hire? b) If the workers cost $120,000, how many workers should XYZ hire? c) If workers cost $100,000 but gadgets sell for $80 each, how many workers should XYZ hire? d) If XYZ instead has 20 machines, how many workers should it hire when workers cost $100,000 and gadgets sell for $100?need correct answer !!!!!! 1. If the market value of a firm registers consistent increase, we can reasonably conclude that ________________, (a) Marginal of capital is greater than the cost of capital (b) Tobin’s q measure is greater than 1 (c) Value of its stock is over priced (d) None of the above (e) (a) and (b)
- 1) If a firm, wanting to maintain the same level of output and reduce costs is producing where MPL/MPK <w/r, then it should a) Increase labor and keep capital constant b) Decrease labor and increase capital c) Keep labor constant and decrease capital d) Increase labor and decrease capital2. A firm learns of an investment opportunity that will increase future revenue, two years from now, by $121 million. The marginal resource cost of the physical capital today is $100 million dollars. Should this firm make this investment at an interest rate of 10%? Why?(a) Complete the following table and draw the corresponding graphs. Capital inputs Labor inputs Total product Average product Marginal product 20 0 0 20 1 15 20 2 34 20 3 51 20 4 65 20 5 74 20 6 80 20 7 80 20 8 75 (b) What is relationship between MP and AP? Explain why MP first rises, then declines and ultimately becomes negative? (c) Whether the above phenomenon is long run or short run and why? (d) Does law of diminishing marginal returns holds in above scenario? Why and why not.
- Suppose a bakery has 20 employees to be designed as bread bakers (B) and cake bakers (C), so that B+C=20.asap thanksIndicate whether the following statetment is true, false or uncertain and briefly explain why. Use formulas or diagram whenever necessary. Suppose that a firm uses capital, K and labor, L in order to produce output and that rental price of capital is v and wage rate of labor is w. If w decreases, then the demand for capital by the firm will decrease.Assume that a business firm finds that its profit is greatest when it produces $40 worth of product A. Suppose also that each of the three techniques shown in the following table will produce the desired output. a. With the resource prices shown, which technique will the firm choose? Why? Will production using that technique entail profit or loss? What will be the amount of that profit or loss? Will the industry expand or contract? When will that expansion or contraction end? b. Assume now that a new technique, technique 4, is developed. It combines 2 units of labor, 2 of land, 6 of capital, and 3 of entrepreneurial ability. In view of the resource prices in the table, will the firm adopt the new technique? Explain your answer. c. Suppose that an increase in the labor supply causes the price of labor to fall to $1.50 per unit, all other resource prices remaining unchanged. Which technique will the producer now choose? Explain. d. “The market system causes the economy to conserve most…