{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

2008ps3 - answer key

2008ps3 - answer key - BUAD 351 Economic Analysis for...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
BUAD 351 - Economic Analysis for Business Decisions Homework 3 due: Wed 03/05/2008 PART (i): multiple choice question 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 answer b c b c d d d c d d b c a b d PART (ii): Longer questions 1. Suppose a °rm±s short-run production function is given by Q = 3 p L; where L is the num- ber of hours of labor employed. The °rm has a sunk cost of $500 and the wage rate is $18. What is the °rm±s short-run (total) cost function? Q = 3 p L so L units of labor produce Q 2 = 9 units of output. Thus, the short-run cost function is given by C ( Q ) = 500 + 2 Q 2 2. De°ne the e¢ cient production frontier and the production function E¢ cient production frontier contains the combinations of inputs and outputs that the °rm can achieve using e¢ cient production methods. A production function is a mathematical representation of this relationship. Output=R(Inputs). 3. Suppose you are facing a downward-sloping inverse demand curve, P = P ( Q ) : De°ne the marginal revenue curve. What two e/ects enter the determination of marginal revenue? The marginal revenue curve is the change in total revenue that results from increasing output "a little bit". That is, given that the total revenue can be written as TR ( Q ) = Q ° P ( Q ) ; marginal revenue is the derivative of the total revenue curve, MR ( Q ) = dT R ( Q ) dQ ; which gives the slope of the total revenue curve at any level of output.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}