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# Economics from the Firm

Question1

A quick food restaurant currently will pay \$5 each hour for web servers and \$50 per hour to rent ovens and other home machinery. The restaurant uses seven hours of server time every unit of machinery period. Determine whether the restaurant is definitely minimizing the expense of production when the rate of limited products (capital to labor) is 12. If not really, what adjustments are called pertaining to to improve the efficiency in resource work with? The ratio of rates PK/PL= r/w= 50/5=10 and

The capital to labor MPK/MPL= w/r=12

Both of these ratios are not equal, the restaurant should change advices. To make the proportions equal the restaurant ought to use even more capital and fewer labor. This kind of tells us the capital is definitely 12 instances as effective and ten-times more costly.

Question2

A competitive firm provides its merchandise at an amount of \$0. 10 per unit. Its total and marginal cost functions are: TC = 5 -- 0. 5*Q + zero. 001*Q2

MC = -0. 5 & 0. 002*Q, where TC is total cost (\$) and Q is end result rate (units per period period). (a) Determine the outcome rate that maximizes revenue or minimizes losses inside the short-term. R=P*Q=0. 10*QMR=0. 12

MC=-0. 5+0. 002Q=0. 10=MR; 0. 002Q=0. 6; Q=300

(b) In the event that input rates increase and cause the fee functions to get TC sama dengan 5 - 0. 10*Q + zero. 002*Q2

MC = -0. 15 + zero. 004*Q,

what will the new equilibrium outcome rate always be? Explain what happened to the revenue maximizing end result rate once input prices were elevated. MC sama dengan -0. 10 + 0. 004*Q=0. 10=MR; 0. 004Q=0. 20; Q=50

An increase in suggestions price triggers an increase in the firm's limited cost. Even as we can see the availability decrease via 300 to 50. A firms earnings will be decreased too.

Component 2

Issue 2

(a) Find the equilibrium selling price, the sense of balance quantity, the outcome supplied by the firm, as well as the profit of every firm.

MarketFirm

S

MC

P

P=MR=d

D

Sense of balance price

QD(P)=6500 - 100*PQS(P)= 1200*P

QD=QS

6500 вЂ“ 100*P=1200*P...

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