Exam 18: Profit Maximization-Part A

A competitive firm produces a single output using several inputs.The price of output rises by $3 per unit.The price of one of the inputs increases by $6 and the quantity of this input that the firm uses increases by 12 units.The prices of all other inputs stay unchanged.From the weak axiom of profit maximization we can tell that

When Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is 1 -N/200 bushels of corn.If the price of corn is $1 per bushel and the price of fertilizer is $.20 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

When Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is 1 -N/200 bushels of corn.If the price of corn is $4 per bushel and the price of fertilizer is $1.20 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

The production function is given by f(x)= 4x^1/2.If the price of the commodity produced is $60 per unit and the cost of the input is $20 per unit, how much profit will the firm make if it maximizes profits?

A competitive firm's production function is f(x₁, x₂)= 8x^1/2₁ +8x^1/2₂.The price of factor 1 is $1 and the price of factor 2 is $3.The price of output is $6.What is the profit-maximizing quantity of output?

A profit-maximizing competitive firm uses just one input, x.Its production function is q = 8x^1/2.The price of output is $24 and the factor price is $8.The amount of the factor that the firm demands is

If the short-run marginal costs of producing a good are $20 for the first 400 units and $30 for each additional unit beyond 400, then in the short run, if the market price of output is $21, a profit-maximizing firm will

The production function is f(x₁, x₂)=x^1/2₁x^1/2₂.If the price of factor 1 is $6 and the price of factor 2 is $12, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

A competitive firm has a production function described as follows."Weekly output is the square root of the minimum of the number of units of capital and the number of units of labor employed per week." Suppose that in the short run this firm must use 16 units of capital but can vary its amount of labor freely. a.Write down a formula that describes the marginal product of labor in the short run as a function of the amount of labor used.(Be careful at the boundaries.) b.If the wage is w = $1 and the price of output is p = $4, how much labor will the firm demand in the short run? c.What if w = $1 and p = $10? d.Write down an equation for the firm's short-run demand for labor as a function of w and p.

Jiffy-Pol Consultants is paid $1,000,000 for each percentage of the vote that Senator Sleaze receives in the upcoming election.Sleaze's share of the vote is determined by the number of slanderous campaign ads run by Jiffy-Pol according to the function S = 100N/(N + 1), where N is the number of ads.If each ad costs $3,600 approximately how many ads should Jiffy-pol buy in order to maximize its profits?

A firm produces one output using one input.When the cost of the input was $3 and the price of the output was $3, the firm used 6 units of input to produce 18 units of output.Later, when the cost of the input was $7 and the price of the output was $4, the firm used 5 units of input to produce 20 units of output.This behavior

If the value of the marginal product of labor exceeds the wage rate, then a competitive, profit-maximizing firm would want to hire less labor.

Philip owns and operates a gas station.Philip works 40 hours a week managing the station but doesn't draw a salary.He could earn $600 a week doing the same work for Terrance.The station owes the bank $100,000 and Philip has invested $100,000 of his own money.If Philip's accounting profits are $1,000 per week while the interest on his bank debt is $500 per week, the business's economic profits are

A competitive firm produces a single output using several inputs.The price of output rises by $4 per unit.The price of one of the inputs increases by $2 and the quantity of this input that the firm uses increases by 8 units.The prices of all other inputs stay unchanged.From the weak axiom of profit maximization we can tell that

The production function is given by f(x)=4x^1/2.If the price of the commodity produced is $60 per unit and the cost of the input is $10 per unit, how much profit will the firm make if it maximizes profits?

The production function is given by F(L)= 6L^2/3.Suppose that the cost per unit of labor is $16 and the price of output is $8.How many units of labor will the firm hire?

A profit-maximizing competitive firm uses just one input, x.Its production function is q = 4x^1/2.The price of output is $12 and the factor price is $3.The amount of the factor that the firm demands is

During the height of the pet rock craze in the 1970s, the price elasticity of demand was estimated to be 1.20.Since pet rocks have a marginal cost of zero, a profit-maximizing seller of pet rocks would

Philip owns and operates a gas station.Philip works 40 hours a week managing the station but doesn't draw a salary.He could earn $800 a week doing the same work for Terrance.The station owes the bank $100,000 and Philip has invested $100,000 of his own money.If Philip's accounting profits are $1,000 per week while the interest on his bank debt is $300 per week, the business's economic profits are

A competitive firm produces output using three fixed factors and one variable factor.The firm's short-run production function is q = 524x - 4x², where x is the amount of variable factor used.The price of the output is $3 per unit and the price of the variable factor is $12 per unit.In the short run, how many units of x should the firm use?