Producer Theory Practice Problems
Intermediate Micro
Chapter 7 Comparative Statics
1.
Use the information from an earlier problem that we did in class. You have the optimal
combinations of capital and labor and the level of output in your notes.
w = $5
r
Central Limit Theorem and Normal Distribution
You toss a coin. H is 1 and T is 0. You keep tossing a coin infinitely many
times. Let the random variable from n-th toss Xn . For example the random
variable from first toss is X1 . Note that all the random v
QUESTIONS
Q1. The demand for a profit-maximizing competitive firm is: Q = 600 - 2.5P; where P is the
price of the product and Q is the number of units produced. Suppose that the firms marginal cost
of production is $24. Calculate the firms profit-maximizi
EC 705: Econometrics
Answers to Problem set 1
Distribution of X
Answer to 3.
X
1
2
3
4
prob 1/6 1/6 1/6 1/6
5
6
1/6 1/6
It is convenient to make a table to calculate the expectation and the variance.
Prob X
P rob X
X E(X) (X E(X)2
P rob (X E(X)2
1/6
1
1/6
Q1.
Suppose a chair manufacturer is producing in the short run. The manufacturer has
observed the following levels of output.
Number of Workers
1
2
3
4
5
6
7
8
9
10
a)
b)
c)
d)
Total Product
10
18
24
28
30
30
28
25
21
15
Marginal Product
Average Product
C
EC 705: Econometrics
Problem set 2
Please submit hard copy of your answers at class. No e-mail submission will be
accepted without any proper reason for absence.
1. Consider discrete random variables X and Y with the probability distribution shown below.
20 : Theory of Cost
1
Session Outline
Production cost
Types of Cost: Accounting/Economic Analysis
Cost Output Relationship
Short run cost Analysis
Prof. Trupti Mishra, School of Management, IIT Bombay
Cost of Production
Business decisions are generally ta
Problems on theory of production (Chapter 6)
1. A Company has an assembly line of fixed size A. Total output is a function of the number of
workers as shown in the following schedule:
No. of Workers (L)
Total Output (Q)
0
0
1
10
2
30
3
50
4
56
5
59
6
60
7