Short%20Run%20Cost%20-%20Perfect%20Competition

Short%20Run%20Cost%20-%20Perfect%20Competition -...

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Short Run Cost – Perfect competition Econ 419 – Maymester 2010 A firm’s product sells for $3 per unit in a highly competitive market.   The firm rents capital at a rate of  $100 per hour and employs 20 hours of labor under contract for a wage equal to $15 per hour.    Production is  given in the table below: K L Q 0 2 0 0 1 2 0 50 2 2 0 15 0 3 2 0 30 0 4 2 0 40 0 5 2 0 45 0 6 2 0 47 5 7 2 0 49 0 8 2 0 48 0 1. The  value of the marginal product of capital  (VMP) equals ___ dollars at a level of output Q = 490.         2. This profit maximizing firm will earn profits of _______dollars. ABC Company’s cost function is estimated to be C(Q) = 9,000+500Q-10Q 2 +(1/3)Q 3 .     For this function,  at the margin, dC(Q)/dQ = 500 – 20Q + Q 2 . 1. At a level of output of 30 units its average variable cost of production equals________.        
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This note was uploaded on 02/06/2011 for the course ECON 415 taught by Professor Holland during the Summer '09 term at Purdue.

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Short%20Run%20Cost%20-%20Perfect%20Competition -...

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