1/3 1/3 Badgett's Gadgets produces gadgets with the production function, y=x, where x is the quantity of labor input, 2 is the quantity of capital input, and y is the quantity of output. In the short run, Badgett's capital input is fixed at x = 8, and so its short run production function is y = 1/3 (8) 1/3 2 1/3 The per-unit price of labor input is w₁ = 20 and the per-unit price of capital input is w240. If Badgett's is a price taker in the output market and can sell as many gadgets as it wishes at a per-unit price of p, what is the lowest value of p at which Badgett's is able to earn positive profits in the short run? Badgett's will earn positive profits for any p > 40. Badgett's will earn positive profits for any p > 80. Badgett's will earn positive profits for any p > 0. Badgett's will earn positive profits for any p> 120.
1/3 1/3 Badgett's Gadgets produces gadgets with the production function, y=x, where x is the quantity of labor input, 2 is the quantity of capital input, and y is the quantity of output. In the short run, Badgett's capital input is fixed at x = 8, and so its short run production function is y = 1/3 (8) 1/3 2 1/3 The per-unit price of labor input is w₁ = 20 and the per-unit price of capital input is w240. If Badgett's is a price taker in the output market and can sell as many gadgets as it wishes at a per-unit price of p, what is the lowest value of p at which Badgett's is able to earn positive profits in the short run? Badgett's will earn positive profits for any p > 40. Badgett's will earn positive profits for any p > 80. Badgett's will earn positive profits for any p > 0. Badgett's will earn positive profits for any p> 120.
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.9P
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Transcribed Image Text:1/3 1/3
Badgett's Gadgets produces gadgets with the production function, y = x, where x1 is the quantity of labor input, 2 is the quantity of capital input, and y is the
1/3
quantity of output. In the short run, Badgett's capital input is fixed at x=8, and so its short run production function is y = 3(8)¹³ = 2z/³.
The per-unit price of labor input is w₁ = 20 and the per-unit price of capital input is w₂ = 40.
If Badgett's is a price taker in the output market and can sell as many gadgets as it wishes at a per-unit price of p, what is the lowest value of p at which Badgett's is able to
earn positive profits in the short run?
Badgett's will earn positive profits for any p > 40.
Badgett's will earn positive profits for any p > 80.
Badgett's will earn positive profits for any p > 0.
Badgett's will earn positive profits for any p > 120.
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