Unformatted text preview: p C = 1. Given ¯ t = 24 hours and nonlabor 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 proﬁtmaximizing quantities of the inputs at the given prices. Calculate maximum proﬁts. c) What are the LR and SR costminimizing quantities of the inputs that the ﬁrm should use to produce y = 90? d) Find the ﬁrm’s LR and SR cost functions. 1...
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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
 Staff
 Economics

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