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Firm Behaviour: Microeconomics (Exercises)

This document contains problems related to firm behavior and microeconomics. It includes 5 problems about determining production quantities given cost functions and prices, whether a firm is in long-run equilibrium, calculating cost functions from production functions, and determining profitable production levels. The document was created by Aleksandra Pawłowska for a group work in microeconomics.

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Камилла Молдалиева
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88 views

Firm Behaviour: Microeconomics (Exercises)

This document contains problems related to firm behavior and microeconomics. It includes 5 problems about determining production quantities given cost functions and prices, whether a firm is in long-run equilibrium, calculating cost functions from production functions, and determining profitable production levels. The document was created by Aleksandra Pawłowska for a group work in microeconomics.

Uploaded by

Камилла Молдалиева
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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FIRM BEHAVIOUR

Microeconomics (exercises)

Aleksandra Pawłowska

December 14, 2018


Problem 1
Problem 2
Problems
Problem 3
Work in a group
Problem 4
Problem 5

The function of the total cost of a perfectly competitive enterprise


has the following form: TC = Q 2 + 10Q. What quantity of
production will be determined by the company at prices: P1 = 60,
P2 = 30, P3 = 12?

Aleksandra Pawłowska FIRM BEHAVIOUR


Problem 1
Problem 2
Problems
Problem 3
Work in a group
Problem 4
Problem 5

Is the company in the long-term equilibrium if the price equals 150


and the total cost function is: TC = 6Q 3 − 2Q 2 + 140Q?

Aleksandra Pawłowska FIRM BEHAVIOUR


Problem 1
Problem 2
Problems
Problem 3
Work in a group
Problem 4
Problem 5

The production function has the following form: y = 2(KL)1/2 .


The company uses 50 units of capital. The prices of labour and
capital factor are 2 and 2 respectively. Determine the function of
total cost, average total cost and marginal cost. Determine the
price level of profitability of production.

Aleksandra Pawłowska FIRM BEHAVIOUR


Problem 1
Problem 2
Problems
Problem 3
Work in a group
Problem 4
Problem 5

What are the functions of total cost, average total cost and
marginal cost, if:
a. The production function is: y = K 3/4 L3/4 , K = 60, cK = 60,
cL = 15,
b. The production function is: y = K 1/4 L1/4 , K = 10, cK = 10,
cL = 2, 5,
c. The production function is: y = K 1/4 L3/4 , K = 20, cK = 5,
cL = 10.

Aleksandra Pawłowska FIRM BEHAVIOUR


Problem 1
Problem 2
Problems
Problem 3
Work in a group
Problem 4
Problem 5

The total cost function for a company producing vodka is given by


the formula: TC = 4Q 2 + 8Q + 10. The price for one bottle is
PLN 32. Calculate how many bottles of vodka should the company
produce, if it would like to be in a short-term equilibrium.

Aleksandra Pawłowska FIRM BEHAVIOUR


Problems
Work in a group

Question 1

What is the marginal rate of technical substitution in the point


(L,K) = (1,3), if the production function is given by the formula:
a. y = KL2
b. y = K 2 L3
1
c. y = K 3 L 2

Aleksandra Pawłowska FIRM BEHAVIOUR


Problems
Work in a group

Question 2

Calculate the average and marginal product for each level of


labour:
L 4 5 6 7 8 9 10 11
y 2 3.5 4 5 8 15 30 55

Aleksandra Pawłowska FIRM BEHAVIOUR


Problems
Work in a group

Question 3

Johnnie Walker produces three types of whisky: red, black and


gold. Complete the table assuming that TFC = 100. Which type
of whisky is profitable to produce?

whisky Q P AVC TVC TC TR TP


red 200 10 6
black 70 5 7
gold 50 5.5 7

Aleksandra Pawłowska FIRM BEHAVIOUR

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