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There are two factors in a production function y=x113 X₂ ¹13. The market price of each unit ofy is p=3, and the factor prices are w₁=1 and W₂=2 for X₁ and X₂ respectively. variable (a). Calculate your cost function as a function of y if x, and x₂ are both barible factors. (b). Now derive the functions of average and marginal cost and plot them against quantity (C). Solve for your optiomal output of y. Calculate the ratio of two factors (X₁/X₂) d). In the short run the fixed factor is set at X2=1, What is the new optimal output level now?

There are two factors in a production function y=x113 X₂ ¹13. The market price of each unit ofy is p=3, and the factor prices are w₁=1 and W₂=2 for X₁ and X₂ respectively. variable (a). Calculate your cost function as a function of y if x, and x₂ are both barible factors. (b). Now derive the functions of average and marginal cost and plot them against quantity (C). Solve for your optiomal output of y. Calculate the ratio of two factors (X₁/X₂) d). In the short run the fixed factor is set at X2=1, What is the new optimal output level now?

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.3P
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dien There are two factors in a production function y = x 113 x₂¹1³. The market price of each unit ofy is p=3, and the factor prices are w₁=1 and W₂=2 for x₁ and X₂ respectively. variable (a). Calculate your cost function as a function of y if X, and x₂ are both barible factors. (b). Now derive the functions of average and marginal cost and plot them against quantity (C). Solve for your optional output of y. Calculate the ratio of two factors (X₁/X₂) (d). In the short run the fixed factor is set at X₂=1. What is the new optimal output level now?
Transcribed Image Text:dien There are two factors in a production function y = x 113 x₂¹1³. The market price of each unit ofy is p=3, and the factor prices are w₁=1 and W₂=2 for x₁ and X₂ respectively. variable (a). Calculate your cost function as a function of y if X, and x₂ are both barible factors. (b). Now derive the functions of average and marginal cost and plot them against quantity (C). Solve for your optional output of y. Calculate the ratio of two factors (X₁/X₂) (d). In the short run the fixed factor is set at X₂=1. What is the new optimal output level now?
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