100B HW3

100B HW3 - Econ 100B: Tang Homework 3: Ch 8 and Ch 9 Due...

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Econ 100B: Tang Spring Quarter 2008 Homework 3: Ch 8 and Ch 9 Due Thursday May 8, at the beginning of class. Please write your name and PID on your homework. 1) Suppose the competitive market price for lunchboxes is $11/unit. Short run total costs for lunchboxes have been found to be: C = 9 + 3 Q + Q 2 a) How many lunchboxes will this firm make? b) Does the second-order condition for this problem hold? c) At what price does profit maximizing supply fall to 0 (what’s the shutdown point)? d) What’s the profit at the optimal point? e) Graph profit-maximizing supply as a function of the market price P . 2) A firm’s short-run production function is given by: Q = KL where the level of capital is fixed at K Define the wage as the constant w , and the rental price of capital to be r . The competitive price of output is P . a) What is the firm’s short run marginal cost? b) At what levels of P (with respect to the other variables) will the firm want to shut down? c) What is the firm’s profit maximizing supply as a function of
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100B HW3 - Econ 100B: Tang Homework 3: Ch 8 and Ch 9 Due...

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