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Homework answers / question archive / 1)The production function is given by f(l,k) = 20*l^(2/5)*k^(2/5)
1)The production function is given by f(l,k) = 20*l^(2/5)*k^(2/5). Assume the wage is equal to $20, the rental rate of capital is equal to $10, and the price of each good sold is $5. i. Set up the profit maximization problem and derive the optimal choices for labor demand, capital demand, and output supply.
to last part of the question.... Approximately how much profit would each firm earn ? ty ansd stay safe Consider Figure 9.2 of the textbook. Suppose a new firm with the same LRAC curve as the incumbent tries to break into the market by selling 4,000 units of output. Estimate what the new firms average cost of producing output would be. If the incumbent continues to produce 6,000 units, how much output would be supplied to the market by the two firms? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn? Thank you and stay safe
4) The total revenue and total cost function that faces firm A are: TR=30Q TC=100+8Q+0.01Q^2 (Note: Q^2 is q-squared)
What is firm's A profit?
5) The total revenue and total cost function that faces firm A are: TR=30Q TC=100+5Q+0.02Q^2 (Note: Q^2 is q-squared)
What is Firm's A marginal revenue (MR)?
6) The total revenue and total cost function that faces firm A are: TR=30Q TC=100+8Q+0.01Q^2 (Note: Q^2 is q-squared)
What is firm's A marginal cost (MC)? 7) A Bank has capital of $100 and a leverage ratio of 5. If the value
of the bank's assets decline by 20 percent, then what will be its new leverage ratio?
resources to manage costs effectively? What do you understand by the term cost effectiveness? Further with the aid of concise descriptions, write down the three branches of this discipline where Managerial Economics analysis is grounded on
9) Firm expansion is a reassuring venture, however, if not managed properly '
Diseconomies of scale and diseconomies of scope' set in. Concisely discuss this statement.
10) What is the difference between GDP deflator and CPI, and what is the better measure?
11) In the topic of World Trade Organisation agreements, has trade non-discrimination
been beneficial for multinational businesses?
12) Suppose GDP is $8 trillion, taxes are $1.5 trillion, private saving
is $0.5 trillion, and public saving is $0.2 trillion. Assuming this economy is closed, calculate consumption, government purchases, national saving, and investment.