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Unformatted text preview: q boomerangs (i.e., what is the ﬁrm’s cost function)? (c) What is the proﬁtmaximizing choice of q as a function of the price of labor, q * ( w )? (d) How does the proﬁtmaximizing quantity change in response to changes in w ? (e) Directly verify that this change is also given by the formula dq * ( w ) dw = [ f ± ( f − 1 ( q * ( w )))] 2 wf ±± ( f − 1 ( q * ( w ))) we derived in the ﬁrst lecture. 1 3. Nicholson and Snyder problem 2.6. 4. Maximize the following: (a) 4 + x 1 − 3 x 2 − 3 x 1 x 2 − x 2 1 − 4 x 2 2 . (b) 4+ x 1 − 3 x 2 − 3 x 1 x 2 − x 2 1 − 4 x 2 2 subject to the constraint x 1 = 2 x 2 . (c) x 1 + x 2 subject to the constraint 1 x 1 + 2 x 2 = 2. (d) x 1 x 2 subject to x 1 + 3 x 2 = 4. (e) log x 1 + log x 2 subject to x 1 + 3 x 2 = 4. (Note that log is the natural log, i.e., base e ). (f) Is there a connection between your answer to parts 4(d) and 4(e) ? 2...
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 Spring '08
 DANNICATAMBAY
 Economics, Microeconomics, Natural logarithm, Logarithm, profitmaximizing quantity change, George J. Mailath, Oz Productions

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