Question

1. The production function of a firm is estimated to be Q=√L√K. The cost of
inputs labour(L) and capital(K) are Rs.2 and Rs.4 per unit respectively. If
the firm producing Q has a budget constraint of Rs.80. What is the
maximum output?

2. Consumer demand function for good X is given by the equation P=100-
Q. What is the price elasticity of demand if the price of the good is
Rs.60?

3. A firm sells its output for Rs.20 per unit. The cost function is TC=16+17Q-
9Q 2 +Q 3 .What it its profit function?

4. A firm has the following production function.
Q=4L 2 +6K 2 -2LK
Budget constraint of the firm is Rs.720, the market going wage rate,
w=Rs.15 and cost of capital, r=Rs.15.Compute the optimum output.

Answer 1

Answer:

The third option is correct