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Intermediate microeconomic theory problem set please help me-(Answered)

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Intermediate microeconomic theory

problem set

please help me


UNIVERSITY OF CALIFORNIA DAVIS

 

DEPARTMENT OF ECONOMICS

 

SPRING 2016

 

ECONOMICS 100: INTERMEDIATE MICROECONOMIC THEORY

 

PROF. ZELDER

 

PROBLEM SET 4

 

Due in class on Thursday May 26

 

PLEASE write your own name on your paper and staple your pages together

 

Please explain your answers with a paragraph or two, including diagrams and/or equations

 

where necessary or useful.

 

(1)

 


 

(2) The diagram below (next page) shows budget lines and an isoquant for a beer manufacturer.

 

It can hire labor L at a cost of w = 24 per unit, and hire capital K at a cost of r = 8 per unit. The

 

production function is:

 


 

q = (1.52)L0.6K0.4

 


 

q=1oo

 


 

100

 


 

0

 

L, Units of labor per hour

 


 

(a) Given the above information, what must be true, mathematically, in order for the cost

 

of producing q = 100 to be minimized?

 

(b) Does this mathematical condition hold at point x? Point y? Point z?

 

(c) If this mathematical condition doesn?t hold at some of these points, what is the firm

 

motivated to do at those points? Be specific.

 

(3)

 


 

(4)

 


 

(5)

 


 

 

Paper#9256911 | Written in 27-Jul-2016

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