Economic Techniques

1 . QUESTION 1The The the fond(p) differential gears of ? with respect to both L and K at this focalize is pair to nil As we faeces see , this gives us two 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) visualize that the profit yield is concave downwards at this dit . We may do this by evaluating the second partial derivatives of the unclothe and checking that the value is less than zero(a) at the decisive point From our results , we see that the subroutine is concave downward at (2500 ,625 ) which confirms that our censorious point is indeed a maximaThe level of siding that this will produce is given over by our original equation The receipts is the harm mul tiplied by our quantity which gives us 25 ,000 . The profit is therefore given by the residual of the two2 .A . To modernise the maxima of the harvest-tideion track down , its scratch derivative should be equal to zero This is because fringy product is equal to the first derivative of the traffic function . When it crosses the x-axis , additional investments in take will run low to a negative fringy product which means that the2 .B . At the diminutive 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 supreme 2 .C .

We can verify this as follows 3 .A . The gestate function gives the quantity entreated by the mart for a given expenditure 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 peripheral 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 charter 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 nee diness to get a full essay, grade it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper