Suppose that a firm cannot give up one input in exchange for the other and still maintain the same level of output. Calculate the elasticity of substitution in this case and elaborate on your answer.
Q: Consider the production function Q = 2(KL)0.5 c) What is the elasticity of substitution at a…
A: Elasticity of Substitution () is given by:
Q: Find the output gap.
A: Y = C + I + G + NX Output gap = Y (actual output)- Y* (potential output)
Q: Given a constant elasticity of substitution (CES) production function as follows: y = [a1x1ρ +…
A: the CES exhibits constant returns to scale It contains other production functions as special…
Q: Define marginal rate of substitution.
A: The marginal rate of substitution(MRS) is a very technical word in economics, defined as the…
Q: 1. Juan Valdez owns a coffee farm in Colombia. His production function is: f(x1, x2) = (x1 – 1)0.25…
A:
Q: Consider the following cost function: awi;w2; y) = wi/2 w21/2,2. (a) Find the marginal cost…
A: Given, C(w1,w2,y) = w21/2w21/2y2
Q: A firm uses two inputs x and y, and their profit function is P(x,y)=2xy+2x-3y. Input x costs $2 each…
A:
Q: Explain the logic that guides the construction of a linear supply function.
A: The market supply curve is the supply curve combined of all the goods at various prices available,…
Q: Suppose the utility function of a person consuming two commodities X and Y with income Birr 600 is…
A: Answer to the question is a follows:
Q: A profit-maximizing firm equates the marginal rate of technical substitution of two inputs to: the…
A:
Q: A production function with the character Decreasing Return to Scale (DRTS) means that if the…
A: 8. Decreasing return to scale (DRS) means when the production scale or production variables…
Q: A firm has a production function given by f (x1,x2) = min{2x1 +x2,X1 + 2x2}. (a) Sketch the isoquant…
A: We are going to find the cost function related to Leontief type production function. Note: As per…
Q: (b) What is his supply function? (c) If lemons cost $4 per pound, the wage rate is $9 per hour, and…
A: The correct answer is given in the second step.
Q: Consider a firm that produces output using industrial robots and skilled labor. Suppose it is the…
A: In a market, when two inputs are used in the production process, any change in the cost.of employing…
Q: Suppose that firms face the following production function: Q = L/5+ K1/5, what is the degree of %3D…
A: Given: Production Function : Q=L15+K15
Q: Explain the logic that guides shifts of a linear supply function?
A: The law of supply- When the price increases and all other things are constant, quantity supplied…
Q: Suppose that firms face the following production function: Q ==InL+InK. What is the degree of…
A: Production function:- Q=13lnL + 23lnK Differentiation of Q with respect to L and K , we will have:-…
Q: Define marginal product and explain the law of diminishing marginal utility advocated by David…
A: Production function depicts the relationship between the inputs and the output. The inputs are the…
Q: Take a Cobb-Douglas production function, find its Elasticities w.r.t output and Elasticity of…
A: Cobb-Douglas production function is a function that represents how two or more inputs, mainly…
Q: The production function of a small firm that produces tarpaulin is given by the table below. L 4 6 8…
A: The formula for output elasticity with respect to labor is calculated as ε=% change in quantity of…
Q: 1. Juan Valdez owns a coffee farm in Colombia. His production function is: f(x1, x2) = (x1 – 1)0.25…
A: Answer - Thank you for submitting the questions but we are authorized to solve one question at a…
Q: *Find the elasticity of scale and the elasticity of substitution for the CES production function…
A: Let the production function be: Q = x1ρ+x2ρ1ρ
Q: You are the manager of a train company. Recently total sales have been a bit low and you are now…
A: The law of demand states that, if all other factors remain equal, the upper the value of a decent,…
Q: A college football coach says that given any two linemen A and B, he always prefers the one who is…
A: Hi Student, thanks for posting the question. As per the guideline we are providing answers for the…
Q: Consider production function Q = K³L3 i. Find RTS ii. Is above production function homogenous?…
A: We will answer the first three subparts only. Please resubmit the question with any other parts…
Q: 2.1. The law of demand states that the higher the price of a good, the higher the quantity demanded…
A: 2.1) The law of demand states that the higher the price of a price changes the quantity demanded…
Q: Suppose that a firm can not give up one input in an exchange for the other and still maintain the…
A: Elasticity of substitution shows the degree at which firms can substitute one input for other for…
Q: For the pizza seller whose marginal, average variable, and average total cost curves are shown in…
A: In the given market, price is constant so it will be equal to marginal revenue. At profit…
Q: At Bob’s Burgers, each burger consists of exactly two buns x, one meat patty y, and one slice of…
A: Profit is total revenue less total cost. Let price of burger sold be P. Total Revenue = P*q Total…
Q: t Bob’s Burgers, each burger consists of exactly two buns x, one meat patty y, and one slice of…
A: Answer a) Q = min * (x / 2, y, z) λ, Q(λ*x, λ*y, λ*z) = Min (λx / 2,λy, λz) =λMin(x/2, y, z) so it…
Q: Problem 1 Technology a) The local cleaner launders white clothes using the production function q =…
A: Given; q=3B+G Marginal Product (MP) is the change in the output when an extra unit of the input is…
Q: 8. Consider the following cost function: C(Q) = 20Q³ – 15Q² + 10Q. Answer the following questions:…
A: cost function is a function that maps an event or values of one or more variables onto a real number…
Q: Define and then derive the expression for the marginal rate of technical substitution.
A: Marginal rate of technical substitution (MRTS) measures the rate at which one factor must give up in…
Q: When profit maximizing, the MRTS of two inputs is equal to a. The ratio of marginal products of…
A: The marginal rate of technical substitution refers to the rate at which one input, such as labor,…
Q: Calculate the elasticity of substitution for the production function
A: elasticity of substitution refers to the ratio of the two inputs to a production function with…
Q: Compute the firm's marginal products, and marginal rate of technical substitution. Report the…
A: Given; Production function; f(L,K)=LK Formula to calculate:- MPK=df(L,K)dKMPL=df(L,K)dLMRTS=MPLMPK
Q: XYZ Corp. produces 1,000 units of output (along the same isoquant) using various combinations of…
A: The elasticity of input substitution tells about the substitutability of inputs when the marginal…
Q: a) Use Shephard's lemma to compute the contingent demand functions for inputs k and l. b) Use your…
A: We have given that : q = 2√k'l √l = q/2√k' l = q2 / 4 k' Capital is fixed in the short run and…
Q: An artisan has the total cost of daily production as a function where q represents the…
A: To decide it's cost , revenue and Marginal function we need to understand how they are calculated .
Q: Derive the elasticity of substitution for the Cobb-Douglas production Fonction. f(L,K) = ALαKβ
A: Elasticity of substitution measures the responsiveness of change in MRTS (Marginal Rate of Technical…
Q: Determine whether the following statements are TRUE or FALSE. Explain your answer using graphs or…
A: In a market, a firm's production decision depends upon input resources and its cost functions.
Q: Consider a production function in such a form: Q= f (K,L)= 3KL Calculate the elasticity of…
A: Marginal rate of technical substitution = marginal productivity of labor/marginal productivity of…
Q: Argue using a graph that the elasticity of substitution for a linear production function, f(1, k) =…
A: The elasticity of substitution refers to the degree of changes in different goods and services which…
Q: A firm's production function is f(x₁, x₂) = (min{x₁,5x₂ })¹/2. If the price of the first factor is…
A: Production function is the functional relationship between the output and inputs. The both inputs…
Q: 4. Given • Labor input price IDR 25,000 • Capital input price IDR 50,000 • The total fund owned by…
A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Suppose that a firm cannot give up one input in exchange for the other and still maintain the same level of output. Calculate the elasticity of substitution in this case and elaborate on your answer.
Step by step
Solved in 2 steps with 1 images
- Suppose that a firm can not give up one input in an exchange for the other and still maintain the same level of output. Calculate the elasticity of substitution in this case and elaborate on your answer.Question 2: For this problem you will analyze the elasticity of substitution and the isoquant graphs for two different production functions F₁(K, L) = 4K + 2L F₂(K, L) = K²/³ [1/3 (a) Graph the isoquant for F₁(K, L) = 4K+2L that represents an output of 8. Be sure to show your work and label the axes clearly (b) What is the marginal rate of technical substitution (MRTS) for F₁ ? (c) What is the elasticity of substitution for F₁ ? /Which firm would have more ability to respond to a change in input prices, one where inputs are perfect substitutes or one where they are combined in proportions? Use graphs to help demonstrate answer
- Question 2: Elasticity of Substitution Show that the production function f (x1,x2) = a ln x, + ß In x, has elasticity of substitution equal to one. a) Find the marginal rate of technical substitution MRTS,2, express it in terms of a ratio of x2 to x1, call this r = X1 b) Take logs on both sides, c) Find the derivative of In MRTS12 with respect to In r. The inverse of this quantity is the elasticity of substitution.Consider the production function Q = 2(KL)0.5 c) What is the elasticity of substitution at a point K = 1, L = 1 if we increase K by one unit?Define marginal product and explain the law of diminishing marginal utility advocated by David Ricardo.
- 13) You begin to work at a factory that produces Aguardiente (Firewater, a type of alcoholic beverage), the function of production its represented by the technology: Q(L, K, Z) = L³K+zł Where with offers of input perfectly elastic A) Salary w is the price of labor L. B) Interest r is the price of capital K. C) Rent q is the price of drinkable alcohol Z. Calculate The function of demand for each input The function of offer for the Firewater The function of total costs for the Firewater The maximum benefit.For the (Cobb-Douglas) production function, Y =LaKb , find: The two output elasticities The marginal rate of substitution The elasticity of substitution13) You begin to work at a factory that produces Aguardiente (Firewater, a type of alcoholic beverage), the function of production its represented by the technology: Q(L, K, Z) = L³ K+z! Where with offers of input perfectly elastic A) Salary w is the price of labor L. B) Interest r is the price of capital K. C) Rent q is the price of drinkable alcohol Z. Calculate The function of demand for each input The function of offer for the Firewater The function of total costs for the Firewater The maximum benefit.
- Suppose that firms face the following production function: Q = L5 + K1/5. What is the degree of elasticity of substitution? infinity 5/4 O 1/5Juan Valdez owns a coffee farm in Colombia. His production function is: f(x1,x2)=(x1−1)^0.25 x2^0.5 Assume the price of input 1 is r and the price of input 2 is w. (a) Write down an expression for the technical rate of substitution. (b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce. (c) Find Juan's cost function. (d) What is the supply function of Juan's firm?1. Juan Valdez owns a coffee farm in Colombia. His production function is: f (x1, x2) = (x1 – 1)0.25 x9-5. Assume the price of input 1 is r and the price of input 2 is w.. (a) Write down an expression for the technical rate of substitution. (b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce. (c) Find Juan's cost function. (d) What is the supply function of Juan's firm? 2. Show that the profit function is convex in (p, w). 3. Find the profit function for the Cobb-Douglas production function f(¤1, 12) = Ax†' x" with A > 0, a1, ¤2 > 0 and a1 + a2 0, B > 0, 0 < a < 1, and 0 + p< 1. 6. Find the profit function for the CES production function. 7. Verify Hotelling's Lemma for the CES production function with B < 1.
