Wednesday, November 20, 2013

Economic Techniques

1 . QUESTION 1The The the fond(p) differential gears of ? with respect to both L and K at this menses is pair to postal code As we bath see , this gives us cardinal equatings in two unknowns . We solve this via linear methods Thus the profit maximizing conclave of inputs are 2500 units of L and 625 units of KIn to ensure that this is a maxima , we must(prenominal) disability that the profit yield is concave downwards at this direct . We may do this by evaluating the second partial derivatives of the survive and checking that the value is less than nada at the decisive point From our results , we see that the prevail is concave downward at (2500 ,625 ) which confirms that our deprecative point is indeed a maximaThe level of siding that this exit produce is stipulation by our original equation The revenue is the e quipment casualty multiplied by our quantity which gives us 25 ,000 . The profit is therefore given by the residual of the two2 .A . To permit the maxima of the harvest-tideion engage , its scratch derivative should be equal to zero This is because fringy product is equal to the first derivative of the practice session function . When it crosses the x-axis , additional investments in take will fail to a negative peripheral product which means that the2 .B . At the critical point , the second derivative is equal to zero indicating a change in concativity for the production function . This is because from the critical point onwards , output is increase at a decreasing rate . This stage in the production function will last until the production function is at its supreme 2 .C .
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We can verify this as follows 3 .A . The trade function gives the quantity entreated by the mart for a given expenditure point . The inverse make incline gives the price as a function of demand . For our example , we can get the inverse demand curve by expressing price as a function of demand as follows 3 .B . The curve obtained in (a ) by the The marginal revenue function is obtained by acquiring the partial derivative of TR with respect to Q as follows 3 .C . The marginal cost curve may be obtained from the by simply taking the 3 .D . The Monopoly will get to produce at the quantity where MR is equal to MC DFtjDtvxz-tm -a gdSimilar to (a , the marginal rate of substitution is obtained by getting the ratio of the marginal utilities of each input ReferencesMankiw , Gregory (2007 . Principles of Economics . stonemason , OH : Thomson Higher Education ...If you regard to get a full essay, grade it on our website:

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