Business, 17.10.2021 07:10, matiasjjj14

GMC is producing cars using machines (K) and labor (L). The technology is capital intensive; the production function is given by F(K, L) = K(3/4)L(1/2). The value of GMC physical capital (machines, real estate etc.) is equal to K =$16 billon (in calculations ignore billions). We analyze rm's behavior in the short run (note K cannot be changed in the short run). Suppose the price of a car is equal to p and the wage rate is w (parameters). a) Write down the profit as a function of L.

b) On a graph with L on the horizontal axis and $ on the vertical axis, plot two components of proit function: total revenue (pF(K, L)), and labor cost (wL) (when drawing, assume p = 1 and w = 2). On the graph, mark the prot level as the dierence between the two lines (for any given L).

c) In order to find x that maximizes some function f(x), we take the rst derivative of the function with respect to x and set it equal to zero (we call it a rst order condition). Please explain intuitively why this method allows us to find the optimum.

Answers: 3

Show answers

Other questions on the subject: Business

Business, 22.06.2019 01:40, Cosio

Kis the insured and p is the sole beneficiary on a life insurance policy. both are involved in a fatal accident where k dies before p. under the common disaster provision, which of these statements is true?

Answers: 1

continue

Business, 22.06.2019 06:20, karankhatri1946

James albemarle created a trust fund at the beginning of 2016. the income from this fund will go to his son edward. when edward reaches the age of 25, the principal of the fund will be conveyed to united charities of cleveland. mr. albemarle specified that 75 percent of trustee fees are to be paid from principal. terry jones, cpa, is the trustee. james albemarle transferred cash of $500,000, stocks worth $400,000, and rental property valued at $250,000 to the trustee of this fund. immediately invested cash of $360,000 in bonds issued by the u. s. government. commissions of $7,900 are paid on this transaction. incurred permanent repairs of $9,000 so that the property can be rented. payment is made immediately. received dividends of $8,000. of this amount, $3,000 had been declared prior to the creation of the trust fund. paid insurance expense of $4,000 on the rental property. received rental income of $10,000. paid $8,000 from the trust for trustee services rendered. conveyed cash of $7,000 to edward albemarle.

Answers: 2

continue

Business, 22.06.2019 10:50, stodd9503

Explain whether each of the following events increases, decreases, or has no effect on the unemployment rate and the labor-force participation rate. a. after a long search, jon finds a job. b. tyrion, a full-time college student, graduates and is immediately employed. c. after an unsuccessful job search, arya gives up looking and retires. d. daenerys quits her job to become a stay-at-home mom. e. sansa has a birthday, becomes an adult, but has no interest in working. f. jaime has a birthday, becomes an adult, and starts looking for a job. g. cersei dies while enjoying retirement. h. jorah dies working long hours at the office.

Answers: 2

continue

Business, 22.06.2019 17:10, mikailah0988

At the end of the current year, accounts receivable has a balance of $550,000; allowance for doubtful accounts has a credit balance of $5,500; and sales for the year total $2,500,000. an analysis of receivables estimates uncollectible receivables as $25,000. determine the net realizable value of accounts receivable after adjustment. (hint: determine the amount of the adjusting entry for bad debt expense and the adjusted balance of allowance of doubtful accounts.)

Answers: 3

continue

Do you know the correct answer?

GMC is producing cars using machines (K) and labor (L). The technology is capital intensive; the pro...