Suppose that we have perfectly competitive input markets (for both capital and labor) and output markets....
Suppose that we have perfectly competitive input markets (for both capital and labor) and output markets. Firm "Tropical Juice" produces orange juice which it sells at $6. The input price that the firm faces is an hourly wage of $5 and the rental rate of $2.
Furthermore, the firm currently has a capital stock of 2.
Find the labor demanded by the firm in the short run under the following production technologies.
a) f(k,l) = k0.1l0.9
b) f(k,l) = max{k, 4l(1/2)}
c) Given the answers in part a and b, rewrite both problems as a cost minimization problem and show the labor demanded for the optimal quantity produced is the same.
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Suppose that we have perfectly competitive input markets (for
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Suppose that we have perfectly competitive input markets and output markets. Firm "Tomato Harvesting" produces canned tomatoes which it sells at $50. Suppose that initially the firm's production technology is given by: f(k,l) = l(1/2) Technological innovation has occurred, however. A new harvester has been invented by a professor. If the firm employs the tomato harvester, the new production technology is given by: f(k.l) = k0.25l(1/2) The rental rate of capital =$2 a) Suppose the market wage is $3. How...
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3. Suppose a perfectly competitive firm uses capital and labor to produce a single output. The...
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