Using the implicit function theorem to maximize profit.

Assume that firm A produces good G using only labor. Therefore, the firm's output is a function of the quantity of labor hired (i.e. output = q(L)). Assume further that this firm receives a price (p) for good G and pays laborers a wage (w) that are both constant, and that the firm pays a constant health care cost (h) for each worker. If total revenue is calculated as pq(L), and the total cost of paying all laborers is measured by the equation TC = (w + h)L, we have a profit function that looks like this:  = pq(L) - (w + h)L. To maximize profits, firm A must adjust L until profits are maximized at L*. a. From the profit equation, derive an equation for the m... click for more

applied microeconomics

How much time should be spent studying for each class? That is, maximize GPA by determining E* and U* subject to the 12 hour study time constraint. b. Did this allocation of study time maximize or minimize your GPA?

Implicit Function Theorem

Use the Implicit Function Theorem to derive an equation for the slope of the isoquant associated with this production function.

Monopolist Problem

a. Find the equilibrium levels of output for goods 1 and 2. b. Show whether these levels of output maximize profits. c. Use comparative statics to show whether this monopolist's equilibrium profits will rise or fall if the monopolist makes these goods more similar (i.e. more homogeneous).

Internal economies of scale and the six-tenths rule

The six-tenths rule quantifies the relationship between the relevant costs of a firm's decision to expand and the increased internal economies that result from that expansion. 1. A small printing firm has technological costs of £48000 per annum, which give it a processing capability of 200 documents per week. The total monthly revenue the firm currently receives from the sale of these high value documents is £16000. The firm's owner draws an annual salary of £42000, and those of the four workers involved directly in the processing of documents amounts to a further £72000 per annum. Additionally a part-time administrator is employed at an annual cost of £12000. It is assumed that... click for more