labour for $1. When you took over this role, your boss told you that Q = 24 was the profit maximizing output for this multi-plan firm: 24 = q1 + q2 + q3. Now, the price of labour rises to $4. Provide (i) Isoquant/Isocost diagrams, (ii) Total Cost and (iii) Marginal Cost diagrams. Illustrate the substitution effect (point a to b) and output effect (point b to c) on these diagrams. Explain why your firm uses less capital even when the price of labour increases. (September 2010) For the production function
Words: 50660 - Pages: 203
27 8 Slutsky Equation 30 9 Buying and Selling 33 10 Intertemporal Choice 37 12 Uncertainty 39 14 Consumer Surplus 43 15 Market Demand 46 18 Technology 48 19 Profit Maximization 52 20 Cost Minimization 54 21 Cost Curves 57 22 Firm Supply 59 23 Industry Supply 62 24 Monopoly 64 2 25 Monopoly Behavior 67 26 Factor Market 72 27 Oligopoly 76 28 Game Theory 80 30 Exchange 85 3 Ch. 1. The
Words: 12774 - Pages: 52
Administration, writes Nate Silver. (Esquire, 2009) Mergers and Acquisitions within the Auto Industry Looking at the data provided by Big Drive Auto, see chart below. The data reflects the total revenue they receive far outweighs the total cost for the company. This economically would result in expanded production and movement, thus causing growth and competitiveness which would result in mergers and acquisitions (McConnell et al., 2009). Big
Words: 1016 - Pages: 5
analysis indicates that α =1/3 and β =1/2, A=10 a) The owner of the plant claims that there is increasing return to scale, Is he right? b) If the cost of labor W =$ 6,the cost of capital r is =$ 2, and the price of output is $20/unit. Find the least cost combination of L and K and the level of output at which profit is maximized. What is the total cost at the optimum level of Q? 2. Frisbees are produced according to the production function: Q = 2K + L where Q = output of Frisbees per hour
Words: 492 - Pages: 2
influence the market by changing the quantity, yet they can do so by changing the price of the product. Moreover, the electricity is a homogenous product which is also suits Bertrand model. However, in this given example two plants have different marginal costs. This means that plant 2 can not set its price for electricity lower than 15, as it would be unprofitable for it. At the same time, plant 1 can afford to set the price lower than 15, which would eventually result in plant 1 grabbing the whole
Words: 567 - Pages: 3
are given that the unit cost of transport for both rail and ship are the same. | Vizag | Goa | Mangalore | Mumbai | 50 | 23 | 61 | Chennai | 48 | 25 | 41 | Cochin | 59 | 66 | 63 | But for Ship there is an additional initial investment and for Rail there is VAT charges. This increases the cost of transportation. The new Cost for Ship is: | Vizag | Goa | Mangalore | Mumbai | 61 | 31 | 66 | Chennai | 54 | 30 | 54 | Cochin | 63 | 68 | 64 | The new cost for Rail is: | Vizag
Words: 404 - Pages: 2
Econometric Methods FIN5EME Semester 1, 2013 Assignment 2 * Cobb-Douglas cost function: TCi = µQiβ2 pi1β3 pi2β4 pi3β5 (1) Where, TCi= Total Cost for firm i Q= Output of firm i pi1= Wage Rate pi2= Rental Price of Capital pi3= Fuel Price * Taking the natural log of equation (1) log(TCi)= β1 + β2 log(Qi) + β3 log(pi1) + β4 log(pi2) + β5 log(pi3) + ei (2) where β1= (logµ) and ei= error term. * Eviews Output of the log-log model is as follows:
Words: 2131 - Pages: 9
Question 1. I think he was average at both. He often cheated on his exams because his memory wasn't very good, but he was able to make the unique, creative connections which is why he could achieve success in creating life where others could not. I admire that he wants to overcome death so that he can be rich by selling the "cure" to wealthy people in Europe. I will never fault anyone for wanting to make money. However, I dislike the fact that he was an anti-Semitic, racist who refused to
Words: 566 - Pages: 3
Total Revenue, Average Revenue and Marginal Revenue Wealth-maximizing Each seller has sufficient market power to set the selling price higher and sell less OR set the selling price lower and sell more The demand curve facing the price searcher is downward sloping Total revenue ( TR ) is the total amount of money(or some other good) that a firm receives from the sale of its goods. It the firm practices single pricing rather than price discrimination, TR = total expenditure of the consumer =
Words: 418 - Pages: 2
network. In response to forecasted demands in 5 years, Usemore is considering building 2 new plants and 6 new warehouses. The problem is modeled as a linear program with objective to minimize cost. However, the model must be formulated as piecewise linear in order to account for the non-linear warehousing costs. The recommended course of action for Usemore is to build 1 new plant, shut down 5 of the existing public warehouses, and open 5 of the new warehouses. Table of Contents Abstract ii
Words: 1969 - Pages: 8
