Me Past Yr

Download as ppt, pdf, or txt
Download as ppt, pdf, or txt
You are on page 1of 8

Question april 2005

question 2
pg56
b) Q = 10.5L+1.5L²-0.0625L³

1. How many units of labour should gamma employ if the


wage rate is RM60 per day for each unit of labaour?
ANS:
dQ/dL = 10.5+3L-0.0625L²

MPL x price of output = w


(10.5+3L-0.1875L² )16 = 60
-3L²+48L+108 =0
L = 18
2. Assumming Gamma fixed cost is RM 1000 per
day. How much would be its total profit per
day?
Tc = w x amount of L +fixed cost
=(60 x 18) + 1000
= 1080+1000
= 2080
TR = PxQ
= 16 x 310.5
= 4968
TP = TR – TC
= 4968 – 2080
= 2888
PART B: APRIL 2007, Q2, pg 64
Given Q = 50K^0.6 L^0.5
a) Compute the level of output
r=75 k=20 w=50 L=25
Q = 50 (20)^0.6 (25)^0.5
=1508.54

b) MPk = dQ/dk
= 30K^-0.4 L^0.5
= 45.25
MPL = Dq/DL
= 25K^0.6 L^-0.5
= 30.17
c) Efficientcy

MPL/w = MPK/r
30.17/50 = 45.25/75
0.60 = 0.60
The operation is operating efficiently
d) EXPANSION PATH
MPL/w = MPK/r
25K^0.6 L^-0.5 = 30K^-0.4 L^0.5
50 75
0.5k = 0.4 L
K = 0.8L

1508.54 = 50k^0.6 L^0.5


1508.54 = 50(0.8 L)^0.6 L^0.5
L = 34.49
e) If the output = 2000

2000 = 50k^0.6 L^0.5


2000 = 50 (0.8L)^0.6 L^0.5
L = 45.73
Therefore, k = 0.8(45.73)
= 5030
f) 0.6+0.5= 1.1
increase in return of scale as more then 1

You might also like