Midterm_review_2019.pdf - Review question 1 A firm uses a single input labor to produce output q according to the production function q = 8 L The

Midterm_review_2019.pdf - Review question 1 A firm uses a...

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Review question 1 A firm uses a single input, labor, to produce output q according to the production function q = 8 L . The commodity sells for $150 per unit and the wage rate is $75 per hour. (i)Find the profit-maximizing quantity of L. (ii)Find the profit-maximizing quantity of q. (iii)What is the maximum profit?
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Review question 4 An unregulated monopoly supplies electricity to an electricity market comprised of 1000 customers. The total market demand in this market is given by Q=10-P in each hour. The marginal cost of generating electricity is $4/MWh. The firm has a capacity of 10 (it can produce up to 10 MWh). The firm has daily fixed costs of $190 which it must incur regardless of production level.
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