ps5_s04 - The firm must pay a fixed cost of $80 if it...

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1. A competitive firm has the short-run cost function srtc(x) = x 3 – 2x 2 + 5x + 6 . Write down equations for: a. The firm's average variable cost function. b. The firm's marginal cost function. c. At what level of output is average variable cost minimized? d. Graph the short-run supply function for this firm, being careful to label the key points on the graph with the numbers specifying the exact prices and quantities at these points. 2. A competitive firm uses two variable factors to produce its output, with a production function x = min {K, L} . The unit price of K is $8 and the unit price of L is $5. Due to a lack of warehouse space, the company cannot use more than 10 units of K.
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Unformatted text preview: The firm must pay a fixed cost of $80 if it produces any positive amount but doesn't have to pay this cost if it produces no output. What is the smallest integer price that would make a firm willing to produce a positive amount? 3. Suppose that Dent Carr's long-run total cost of repairing s cars per week is: lrtc(s) = 3s 2 + 12 . If the price he receives for repairing a car is $24, then in the long run, how many cars will he fix per week if he maximizes profits? Econ 313 - Spring 2004 PS#5-XtraQ DUE at the start of class on Wednesday March 31 No need to hand in the workbook answers, too. But DO the workbook questions even if it is not DUE or you will...
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