Cobb–Douglas. Assume the firm has a generalized Cobb–Douglas technology y=θ∙x1α∙x2β,where0<α,β & θisaparameter. 1. Give a possible interpretation of the parameter θ. Outline the conditions that must be imposed on the parameters to ensure a solution to the profit maximization problem exists. 2. Assume the requested conditions are satisfied and a unique profit maximizing solution exists. How does the optimal choice of output, y∗, vary with the parameter θ?
Q: 1. For each of the following scenarios, first determine if the transaction is going to be included…
A: GDP determines the value of all the final expenses or the total output in an economy within a…
Q: Explain the functions of the Federal Reserve. Give examples.
A: The Federal Reserve System (FRS) is the nation's central bank. The Federal Reserve, or Fed, is in…
Q: GDO minus depreciation is the the formula used to calculate a- net national product b- gross…
A: GDO refers to the Gross domestic output. This economic variable actually includes the depreciation…
Q: Continuing your analysis of the competitive US manufacturing industry from Question 1, with demand…
A: Given information Qd = 300 – 4P Qs = 2P – 60 Technological innovation shifts the supply curve by $30…
Q: Will, Jill, and Phil are all wheat farmers. The wheat industry s perfectly (purely) competitive. The…
A: A marketing situation in which there are many vendors of a product that cannot be distinguished and,…
Q: What is labor force a- the toal employment divided by the total number of unemployment b- the…
A: The labor force is the amount of employed in addition to the unemployed, and the unemployment rate…
Q: ployment and unemployment c-the sum of employment and u
A: Labour force = unemployed + employed individuals It is the amount of individuals who are employed or…
Q: Should the Federal Reserve System control the nation's money supply? How the Fed has responded to…
A: The central bank would serve as the heart of a country's economy if it were a human body. The…
Q: Graph below shows the cost curves for a perfectly competitive firm (its total fixed costs are…
A: If P > AC, it implies that the firm earns positive profits. If P > AVC, it implies that the…
Q: Think up a real-world or fictional situation that you can describe with either a sequential or…
A: Simultaneous Game is defined as a game where two or more players play simultaneously. In such games,…
Q: Peter X O a. 3 O b. 2 O c. more than 3 O d. 1 O e. none Y Z R 9,6 6,6 9,7 How many (pure strategy)…
A: "In game theory, a payoff matrix represents the payoffs of players from choosing respective…
Q: (6) Given the following sample data set. X 2 3 Y 10 9 a. Draw a scatter diagram of the data. 5 7 6 4…
A: Two variables are considered to be positively correlated if they vary in the same direction, meaning…
Q: What is the amount of 10 equal annual deposits that can provide five annual withdrawals, when a…
A: Annual Withdrawal = 20458 started from the end of 11 year withdrawal increase by 10% annually r =…
Q: 6. Fiscal policies tend to be automatic as a result of legislation. 7. Taxes always act as automatic…
A: Automatic stabilizers refers to the policies or programs of the government that will counteract the…
Q: Consider a quantity-setting duopoly. The two firms are Alpha, Ltd. and Beta, Inc. The demand…
A: In a Nash equilibrium, the best strategy of firms is determined. The Nash equilibrium is not always…
Q: 1) When and why should a utility approach be applied?
A: "Since you have posted multiple questions, we will provide the solution only to the first question…
Q: Loise spends £20 on tea (T) and coffee (C). Her preferences for these goods can be described by the…
A: Utility function : 2T + C2 - C Price of Tea = 1.6 Price of Coffee = 4 Budget Constraint : 1.6T +…
Q: Nominal GDP GDP deflator Year 1 $200 bill. 100 a. Express year 2 GDP in the prices of year 1 b.…
A: Real GDP is the free of inflation. Real GDP is calculated by dividing the GDP deflator from Nominal…
Q: Highlight four anti-corruption policy and program instruments that have been developed to combat…
A: Corruption: Many different points of view and criteria have been used to try to define or classify…
Q: Which of the following is true of a monopolistically competitive firm in long run equilibrium? Price…
A: In monopolistically competitive market , The profit maximization quantity is where MR = MC. In…
Q: 9. A self employed individual, Jimmy Carpenter, is opening a retirement account at a bank. His goal…
A: A cash flow series with a geometric gradient either increases or decreases by a fixed proportion…
Q: explain how technology advancement could be a factor for the unemployment rate
A: The most popular method for calculating a nation's unemployment is the unemployment rate. The…
Q: Economist who generally empgasize the importance of aggregate supply in determining the size of the…
A: Aggregate Supply refers to the total quantity of output that all the firms in the economy will…
Q: A device costs $5000 and has a salvage value of $800 after its useful life of 7 years. Calculate the…
A: Depreciation is the normal wear and tear of assets whose value decreases over the use. Straight…
Q: In order to reduce the nominal interest rate, the central bank: reduces the money supply raises the…
A: "As there are two different questions, so answer is provided to the first question." "Money demand…
Q: 9) What is (or are) the Nash equilibrium (NE) (or equilibria) of the game if any exist? O There is…
A:
Q: what are the common issues encountered in electonic banking? how commercial banks respond to them?…
A: Introduction Electronic banking is a form of banking in which funds are transferred through an…
Q: Pam has a monthly budget of £120 to be spent on T-shirts and trainers. She could afford to buy two…
A: 1) As it is given in the question that the person can purchase eight T shirts(s) and exhaust all his…
Q: Suppose a monopolist's profit-maximizing output is 200 units per week and that the firm sells its…
A: In a monopolistic market the profits are maximized by equating marginal cost with marginal revenue.
Q: . During the late 1980s and early 1990s, most of the budget deficits were accounted for by a.…
A: Since you have posted multiple questions, we will answer the first question for you. If you want any…
Q: Assume you have the following von Neumann-Morgenstern utility function: u(w)=10000-(200-w/1000)^2…
A: The Utility function is defined as a technique used in economics to determine a consumer's degree of…
Q: Pattern in which economies with low per capita incomes grow faster than economies with high per…
A: Per capita income is the ratio of total income and total population in the economy.
Q: The following graph plots daily cost curves for a firm operating in the competitive market for…
A: In a perfect competition , The firm will produce where Price is equal to marginal cost. So, P =…
Q: 1. Consider a 3-consumer, 3-commodity exchange economy. Index the consumers as a, b, c and…
A:
Q: An electronic device is available that will reduce this year’s labor cost by$16901.The equipment is…
A: The term "compounded bi-monthly" is often used to describe interest compounding, which is calculated…
Q: Two investors have each deposited D with a bank. The bank has invested these deposits in a long-term…
A: When the payoff is represented in the form of a table or matrix it is called the normal game. The…
Q: if real interest rates fall, output in the short run will (Rise or Fall)
A: The aggregate demand is given as: Y = C (private consumption expenditure) + I (private investment…
Q: Should Banks Reinvest their Profits in the Communities where they operate?
A: Banks are defined as institutions that deal in money and provides money related services to its…
Q: An electronic device is available that will reduce this year's labor cost by$13232.The equipment is…
A: Labour Cost at Year 1 13232 Increases by 7% r 12% Bimonthly r 0.02
Q: Consider a person who consumes two goods, x and y, and has a utility function given by U(x, y) =…
A: Equivalent Variation: When the price of a good changes and hence the consumption bundle, that new…
Q: According to the text explain briefly when decision analysis can be used?
A: Introduction Decision analysis helps us to analyze our decision. It is a discipline addressing…
Q: 15. In the loanable funds market of a closed economy, a government reduces its purchases, moving…
A: Introduction A closed economy is one that does not swap their trading with outside economies. A…
Q: Please assist with question 4.
A: Real GDP is the product of current year quantity and base year price. Real GDP does not include…
Q: Name and describe two different ways the government takes in money (revenue).
A: The two different ways the government takes in money i.e. revenue is - Income tax Corporation tax
Q: After the press conference that followed the Federal Open Market Committee meeting on June 19, 2013,…
A: Introduction The IS curve shows combinations of the interest rates and level of output such that…
Q: 4) Which of the following companies is least likely to operate in an oligopoly? O Burger King, which…
A: A market structure is a classification of different industries as per the characteristics of the…
Q: nd your answer to the nearest cent
A: Given total purchase price (inclusive of tax) = 279.99 $ Sales taxes = 5.4 %
Q: A house and lot can be acquired at a down payment of P 593,000 and a payment of P59300 at the end of…
A:
Q: The quality change bias in the CPI describes how failing to account for quality improvements means…
A: Introduction The consumer price index measures the change in the general price level of the economy.…
Q: A firm's production function requires it to use workers in a fixed ratio to machines of 2 to 1. To…
A: Expenditure minimization problem: For the given prices and utility level the consumer tries to…
b.) Cobb–Douglas. Assume the firm has a generalized Cobb–Douglas technology y=θ∙x1α∙x2β,where0<α,β & θisaparameter.
1. Give a possible interpretation of the parameter θ. Outline the conditions that must be imposed on the parameters to ensure a solution to the profit maximization problem exists.
2. Assume the requested conditions are satisfied and a unique profit maximizing solution exists. How does the optimal choice of output, y∗, vary with the parameter θ?
Step by step
Solved in 4 steps with 4 images
- (a) A retail company has a marginal profit curve given by: MP =-2Q 2+ 160Q + 2145. Determine the level of production, or range of production at which the company will have: (i) Increasing returns (ii) Decreasing returns (iii) Negative returns (iv) Its maximum profit (b) A production process varies only with raw materials, as all other inputs are fixed. The cost of a shipment of 8kg of raw materials is fixed at $85. It takes 5kg of raw materials to create one item of output, Q. The marginal revenue for this production process is expressed by: MR = =Q 2 + 520 – 576. 2+52Q Determine the optimal amount of raw materials to be used in this production process. (c) A production process varies with both labour, L and raw materials, M. The production function is given: Q = 1.25L 0.38 +0.9M0.68 Current production level is Q= 800 items and marginal profit is given as a fixed $16.50. Determine what profit can be expected if: (i) Labour is increased by 25%. (ii) Both labour and raw materials are…Green et al. (2005) estmate the supply and demand curves for Californa processod tomatoes. The supply function is: \[ \ln \left(Q_{s}\right)=0.200+0.550 \ln (p) \] whereQis the quantify of processing tomatoes in milions of tons per year andpis the price in dollars per ton. The demand function is: \[ \ln \left(Q_{d}\right)=2600-0.200 \ln (p)+0.150 \ln \left(p_{1}\right) . \] wherep1is the price of tornato paste (which is what processing tomatoes are used to produce) in dollars per ton. Supposept=$119Determine how the equilerium price and quantity of processing tomatees change if the price of tomato pasise tails by16%. If the price of tomato paste fals by18%, then the equaborium price will by 5 (Enter a numene response using a real number rounded to two decimal places)COURSE: MICROECONOMICS - Cournot Model:In the market for a given good there are only 2 firms satisfying the demand, and their respective total cost functions respond to the form: CTi = 10Qi + 5 and the demand is estimated to be: P = 31 - QIf the decision variable for both firms is that the quantity they will produce and realize will be decided simultaneously it is asked to:(a) calculate the profit and reaction function of each firmb) graph market equilibriumc) calculate the profits that both companies will obtain in equilibrium
- ASAP PLZ You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Qi) = 2Qi, and the inverse market demand curve for this unique product is given by P = 650 −3 Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $1,800, Taurus Technologies can bring its product to market before Spyder finalizes production plans. (Assume Taurus Technologies is the leader in this scenario.)What are your profits if you do not make the investment? $ ____What are your profits if you do make the investment?Instructions: Do not include the investment of $1,800 as part of your profit calculation. $ ____ Should you invest the $1,800? multiple choice Yes - the benefits of establishing…PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$. a- Write the equations of the firm’s costs, as a function of Q: Average Total Cost ATC Average Variable Cost AVC Average Fixed Cost AFC b- Given above costs can you determine what will be the firm’s production in Stage 1? c- What is the breakeven price and breakeven quantity for this firm?A company estimates that the relationship between. unit price and demand per month for a potential new product is approximated by p= $100.00-$0.10D. The company can produce the product by increasing fixed costs $17,500 per month, and the estimated variable cost is $40.00 per unit. What is the demand that maximizes revenue and the maximum revenue? What is the optimal demand, D*, and based on this demand, should the company produce the new product? Why? (Work out the complete solution by differential calculus, starting with the formula for profit or loss per month.)
- PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$. Write the equations of the firm’s costs, as a function of Q: Average Total Cost ATC Average Variable Cost AVC Average Fixed Cost AFC Given above costs can you determine what will be the firm’s production in Stage 1? What is the breakeven price and breakeven quantity for this firm? What is the shutdown price and quantity for this firm? Draw the firm’s costs in a graph as per your determination in (a). Label the breakeven and shutdown price and quantity using information in (b) and (c) above. Given the market price of Pak$ 50 how many units should the firm produce? how many firms are competing in this market in short-run? How many firms will be in the industry in the long-run? How do you interpret the profit or loss condition of PakPerfect? Use a two-panel graph of the Market and…. An electricity producer has a constant marginal cost of production equal to $40 per megawatt. The residual demand for its electricity is given by P (q) = a−bq, where P is the price and q is the quantity of power generated by this producer. The producer knows the slope, b, but he vertical intercept of the residual demand curve, a is unknown. Assume A and B are greater than zero. If you get stuck, you may answer any of the following questions for special case where a = 80 And b = 0.5 for partial credit. (a) What is the marginal revenue, M R(q), for this producer? b) What is the optimal q for this producer? (c) What is the electricity producer’s optimal price? (d) What is the electricity producer’s optimal bid in a uniform price Auction? e) Suppose b is equal to zero. Would the producer have an incentive to submit a bid above its marginal cost? Explain.Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) Required. Determine the company’s total profit function. Also, (i) What are the profit maximizing levels of price and output for the two markets? (ii) Calculate the marginal revenues in each market.? 2. Now consider two cases: (i) Company is effectively able to price discriminate in the two markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging thesameprice in the two markets what are the profit…
- Now suppose firm X undertakes a process innovation that reduces its marginal cost ofproduction from $20 to $15. The fixed cost of undertaking this process innovation is F > 0. Is this atough commitment or a soft commitment? Why? For what values of F would it make sense for firm Xto make this commitment?An Accra Chemical Factory discharges waste products into a river. These wastes kill many tilapia that are swimming upstream to spawn. While there will no doubt be other ecological damages from the chemical effluent, we wish to focus on those of the fishery. Let E be the tonnes of chemical effluent discharged per month. The equation for Marginal Damages (MD) is MD = 6E. The firm’s Marginal Abatement Cost (MAC) is given by MAC = 800 – 10E. a. Sketch the MD and MAC functions graphically on the same axes. b. Suppose E0 is the point where MAC = 0. Find the total damages (TD) to fishery by the factory per month.5. An entrepreneur has costs for storing and shipping materials for his manufacturing process given by the function C (k) = 100 (100 + 9k + 144 / k) when 1 ≤ k ≤ 100, where C (k) is the cost total storage and transportation for 100 days of operation. If a load of k tons of material moves every k days, for what values of k does C (k) have a minimum value?