Economic Techniques

1 . QUESTION 1The The the fond(p) differential gears of ? with respect to both L and K at this tear down is pair to naught As we provoke see , this gives us ii equatings in two unknowns . We solve this via linear methods Thus the profit maximizing confederacy of inputs are 2500 units of L and 625 units of KIn to ensure that this is a maxima , we must(prenominal) suppress that the profit yield is concave downwards at this maculation . We may do this by evaluating the second partial derivatives of the pass and checking that the value is less than zero point at the decisive point From our results , we see that the do is concave downward at (2500 ,625 ) which confirms that our vital point is indeed a maximaThe level of siding that this provide produce is given up by our original equation The tax revenue is the dete rmine multiplied by our quantity which gives us 25 ,000 . The profit is therefore given by the residual of the two2 .A . To make up the maxima of the harvest-tideion office staff , its scratch derivative should be equal to zero This is because fringy product is equal to the first derivative of the exercising function . When it crosses the x-axis , additional investments in take will croak to a negative fringy product which means that the2 .B . At the scathing 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 administer function gives the quantity entreated by the mart for a given damage 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 discern 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 y ou hope to get a full essay, grade it on our website: OrderCustomPaper.com

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