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Economics 4808
Problem Set #3
1.
Describe in words and in mathematical notation the production manager’s problem and its solution.
Make sure to define all of your terms. Then relate the production manager’s problem to the firm’s cost
function.
If you have forgotten about the concept of a cost function please see your 3070 text, or stop
by office hours.
2.
For the following production functions, find the elasticity of output with respect to capital.
a.
LK
Q
=
b.
2
/
1
2
/
1
4
)
,
(
K
L
K
L
Q
=
c.
(
29
2
2
/
1
2
/
1
K
L
Q
+
=
3.
The dorm cafeteria produces meals using only one (mystery) input (amazing but believable).
The
cafeteria's production function is
2
)
(
x
x
Q
=
, where
x
is the amount of input and
)
(
x
Q
is the number of
meals.
a.
How many units of input does it take to produce 144 meals? If the input costs
w
per unit, what
does it cost to produce 144 meals?
b.
How many units of input does it take to produce
Q
meals?
If the input costs
w
per unit, what does
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 '06
 EDWARDMOREY
 Economics

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