ef2452_B07_PS5 - the village is 800 and the local...

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(EF 2452) Problem Set#5 Due: Week 6 Tutorial Class Please write your name, student ID and tutorial number on top of your answer sheet. Q1. The demand function for a monopolist is given by: Q = 20 - P and its total costs (TC) are given by: TC = 48 + 4 Q (a) Find the largest break-even output level the monopolist can produce (i.e. largest output level consistent with zero pro±ts). (b) Find the pro±t maximizing output for the monopolist. Q2. The loss of land, caused by rising sea-level due to global warming, is anticipated to lead to a decline in the population of a rural village in one of the outlying islands of Hong Kong by 5% per annum over the foreseeable future. The current population of
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Unformatted text preview: the village is 800 and the local authorities have threatened to close the local post-o²ce if the population falls below 700. How long is the post-o²ce likely to remain open in this village? Q3. Consider the following production functions, where Q is output and L & K denote the respective amounts of labor and capital used in the production process. For each of them, determine whether they are homogenous and if yes, ±nd whether they have increasing, decreasing or constant returns to scale. (a) Q = √ 2 + √ LK (b) Q = √ 2 LK (c) Q = 10 e 2 L K (d) Q = 10 ln( √ LK ) (e) Q = 50 L 2 3 K 1 2...
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This note was uploaded on 02/22/2009 for the course ECONOMICS 4313 taught by Professor Tsui during the Spring '09 term at HKU.

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ef2452_B07_PS5 - the village is 800 and the local...

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