Imagine that the price of input 1 is $16 per unit, the price of input 2 is $25 per unit, and the firm has fixed costs of $60. The firm is in a competitive market where the market price is $240 per unit of output. How much should the firm produce? How much profit does the firm make? (b) What is the firm's marginal cost when it is producing y units of output? A firm produces its output using the following production function:1 = x ²³ x ²/2f(x₁, x₂) = xwhere x₁ is the amount of input 1 and x₂ is the amount of input 2.(a) Find the conditional input demand function for inputs 1 and 2, as well as the cost function for this firm.

INTRODUCTION:In a competitive market, firms endeavor to maximize profit by strategically determining…

Imagine that the price of input 1 is $16 per unit, the price of input 2 is $25 per unit, and the firm has fixed costs of $60. The firm is in a competitive market where the market price is $240 per unit of output. How much should the firm produce? How much profit does the firm make?

Imagine that the price of input 1 is $16 per unit, the price of input 2 is $25 per unit, and the firm has fixed costs of $60. The firm is in a competitive market where the market price is $240 per unit of output. How much should the firm produce? How much profit does the firm make?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.7P

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Question

(b) What is the firm's marginal cost when it is producing y units of output?

A firm produces its output using the following production function:
1 = x ²³ x ²/2
f(x₁, x₂) = x
where x₁ is the amount of input 1 and x₂ is the amount of input 2.
(a) Find the conditional input demand function for inputs 1 and 2, as well as the cost function for this firm.

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