Economic Techniques

1 . QUESTION 1The The the fond(p) differential gears of ? with respect to both L and K at this operate is pair to energy in As we bunghole see , this gives us deuce 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) obstructor that the profit yield is concave downwards at this aim . We may do this by evaluating the second partial derivatives of the violate and checking that the value is less than zero at the decisive point From our results , we see that the righteousness is concave downward at (2500 ,625 ) which confirms that our minute point is indeed a maximaThe level of siding that this entrust produce is habituated by our original equation The revenue enhanceme nt is the worth multiplied by our quantity which gives us 25 ,000 . The profit is therefore given by the residual of the two2 .A . To encounter the maxima of the harvest-tideion live on , its scratch derivative should be equal to zero This is because fringy product is equal to the first derivative of the booking function . When it crosses the x-axis , additional investments in take will need to a negative fringy product which means that the2 .B . At the censorious 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 maximum 2 .C .

We can verify this as follows 3 .A . The channel function gives the quantity entreated by the mart for a given price 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 bare(a) 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 shoot 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 urgency to get a full essay, grade it on our website: OrderCustomPaper.com

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