1. if the marginal cost of seating a theatergoer is $5 an the elasticity of dema
ID: 2505791 • Letter: 1
Question
1. if the marginal cost of seating a theatergoer is $5 an the elasticity of demand is -3, the profit maximizing price is?
2. A firm determined that its total cost of production is TC=200 +10Q +5Q2. At 10 units of output, the firm's marginal cost is?
3. If output is produced according to Q=4LK, where L is the quantity of labor input and K is the quantity of capital input, the price of K is $10, and the price of L is $5, then the cost minimizing combination of K and L capable of producing 32 units of output is?
Explanation / Answer
1)=> p(1-(1/-3)) = 5
=> P = 15/4 = $3.25
2)MC =10+10Q = 10+10*10 =110
3) => 10 = 4L
=> L=2.5 and for Q=32
=> 32 =2.5*4*K
=> K=3.2
so optimum, K=3.2, L=2.5
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