Economics questions

User Generated

Mhblrunbana

Economics

Description

1. Explain if each of the following statements is true or not:

i. If average product is increasing, marginal product must be less than average product.

ii. If marginal product is negative, average product must be negative.

iii. If average product is positive, total product must be increasing.


2. Suppose that a firm has the production function given by f(x1,x2)=4√(x1x2). Let w1 = $64 and w2 = $1. What is the total cost of producing 20 units of output in the long-run?


3. Consider the same firm as in question 2, who is facing the same input prices

w1 and w2 as above. Suppose that we are now in the short-run and the

firm has to use x2 = 4. What is the short-run cost of producing 72 units of 

output?


4. A firm produces an output using capital and labor using the production technology described by f(xL,xK) = xLxK. Let w denote the price of labor and r denote the price of capital. Assume that w = $2 and r = $1. Derive the equations for the total, average and the marginal cost functions of this firm. 


User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer


Anonymous
Just the thing I needed, saved me a lot of time.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags