Now switch to the firm perspective and suppose a firm produces output y with the Cobb-Douglas production function: y = 2????1 .5????2 .5 .
a. Demonstrate the returns to scale of this technology.
b. If x2 is fixed at 1 unit, derive the marginal product of input 1.
c. If both the price of x1 (w1) and the output price (p) are equal to 1, how much of input 1 (x1) should the firm produce in the short run to maximize profits? (hint: use the profit maximizing "rule of thumb")
d. What is the profit maximizing firm's output level?
e. What are the firm's revenues? f. If w2 = 1, what are the firm's profits?
g. Should the firm shut down?
Recently Asked Questions
- Hi, I'm stumped with this discussion question. Please help. What laboratory situation(s) where you could apply a net ionic equations? Thanks!
- Good night is there a solution to this inventory question I could see
- Please refer to the attachment to answer this question. This question was created from 2A. Additional comments: "Which of these amounts would go on the