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production function is specified as follows:
Q = 64K^0.5 L^0.5
The farm's land area is 500 acres
The unit cost of capital and labour is as follows:
- land $10 per acre
- labour $500 per labour
What is Q when L is 1,2,3,4 and 5?
a. If the price of capital is $5 per unit,determine the expansion path for the firm.
b. The firm currently is producing 200 units of output per period using
input rates of L=4 and K=25. Is this an efficient input combination? Why or why not? If no, determine the efficient input combination for producing an output rate of 200. what is the capital-labor ratio?
c. If the price of labor increases from $4 to $8 per unit, determine the efficient input combination for an output rate of 200. What is the capital labor ratio now? What input substitution has the firm made?
The market contains 100 identical producers of commodity x, each with a supply function given by Qsx=20px
Qdx is the quantity demanded of x
Qsx is the quantity supplied of x
Px is the price of x
1. the market demand and market supply functions of commodity x
demand curve for petrol given by: Qdc = 20 – 5p for p ≤ 4 and Qdc = 0 for p > 4. Each
motorcycle owner has the following demand function for petrol: Qdm = 15 – 3p for p ≤ 5
and Qdm = 0 for p > 5. Prices are expressed as £ per gallon, and quantities as gallons per
a. If the price is £3, now many gallons of petrol per week are bought by (i) each car
owner and (ii) each motorcycle owner?
b. Sketch the market demand curve for petrol (that is, the combined demand from
car and motorcycle owners).
c. Write an algebraic expression for the market demand function.