ajaz_204_2013_2014_HW_1

E price taker with the cost function total fixed cost

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Unformatted text preview: titive firm (i.e. price taker) with the cost function total fixed cost and is a constant. (a) Write down the profit equation in terms of (b) Denote profits by function. (the price), where is the and the cost function. and output by . Write down the profit equation in terms of (the price), (c) For what parameter values is the function in part (b) a concave function? (d) What value(s) of and the cost function in part (b)? Additionally, derive the value function. maximizes the (e) All else equal, what is the change in due to a 1% decrease in (f) Use the envelope theorem to calculate, all else equal, the change in Interpret your answers in economic terms. Interpret your answers in economic terms. (optimal profits) due to a 1% decrease in (g) Use the value function approach to calculate, all else equal, the change in in Interpret your answers in economic terms. (optimal profits) due to a 1% decrease 2 University of Toronto, Department of Economics, ECO 204, 2013 - 20143 ANSWERS Question 1 Plot the following functions in Wolfram Alpha: (a) (b) (c) √ from √ from from 3 University of Toronto, Department of Economics, ECO 204, 2013 - 20143 () ( ) from (d) parts (c) and (d)? . By th...
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This homework help was uploaded on 02/15/2014 for the course E 204 taught by Professor Ajaz during the Winter '13 term at University of Toronto- Toronto.

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