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2020-01-01.pngI cannot find an answer to question a part, which

starts with Sketch the firm's short-run production frontier, clearly indicating the feasible set of production plans. Is it convex? Could you help to solve it? Thank you beforehand.

2020-01-01.png

Question B1 Suppose our price-taking and wage-taking firm can produce a single output x using inputs
labour (l) and capital (k) according to the production function: x = [(1, k) = 7010‘3k0‘5
Assume the we operate in a short-run environment where capital is fixed at 100 units: a) Sketch the firm‘s short-run production frontier, clearly indicating the feasible set of
production plans. Is it convex?
[7 marks] The market wage paid to labour (w) is £90 per unit of labour employed, and the price the
firm receives for each unit of its output (p) is £10 b) If the firm is maximising its profit in the short-run, how much labour (1) does the firm
employ?
[11 marks]

Top Answer

k=100 So, x=f(l,k)= 7 0 l 0 . 3 1 0 0 0 . 5 = 7 0 0 l 0 . 3 The production frontier is convex. Let x = 7 0 0 l 0... View the full answer

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