Posted by **Anonymous** on Thursday, May 6, 2010 at 1:14pm.

Consider a profit maximizing competitive firm with the following production function: y=L^α+K^β where

0 <α< 1 and 0 <β< 1. The firm can purchase labor (L) and capital (K) it wants in competitive input market at unit prices of w and r, respectively. The market price of the firm’s output is p.

a) Find the profit maximizing quantities of labor, L* and capital, K* and output, Y*.

b) Is Y* an increasing function of output price?

c) How does the profit maximizing level of output change when the rental rate of capital is decreased?

## Answer This Question

## Related Questions

- math - Complex numbers α and β satisfy αα¯=ββ¯=&#...
- Math - If α and β are two angles in Quadrant II such that tan α...
- Pure Mathematics - 4) The roots of the equation z^2+2z+4=0 are denoted by α...
- economics - Suppose that for the firm below, the goods market is perfectly ...
- Math/Economics - Suppose that a firm has only one variable input, labor, and ...
- Math/Economics - Suppose that a firm has only one variable input, labor, and ...
- microeconomics - You are given the following information about the costs of a ...
- economics - suppose a competitive market consists of identical firms with a ...
- Business Econ - I need my answers checked for this question, thanks. A firm's ...
- Economics - you are hired as the consultant to a monopolistically competitive ...

More Related Questions