Unformatted text preview: p C = 1. Given ¯ t = 24 hours and non-labor income = 0, determine the optimal choice of l and C at wage rate w for Grace. Show your work. 3. Let f ( x 1 ,x 2 ) = √ x 1 + √ x 2 be the production function of a ﬁrm. Let input prices be w 1 = $2, w 2 = $8, and output price p = $16. Assume input 2 is ﬁxed in the short run at ¯ x 2 = 100. a) Are the inputs perfect substitutes or perfect complements? b) Find the LR and SR proﬁt-maximizing quantities of the inputs at the given prices. Calculate maximum proﬁts. c) What are the LR and SR cost-minimizing quantities of the inputs that the ﬁrm should use to produce y = 90? d) Find the ﬁrm’s LR and SR cost functions. 1...
View Full Document
This note was uploaded on 08/27/2011 for the course ECON 104 taught by Professor Staff during the Spring '10 term at UCSB.
- Spring '10