Exam 18: Profit Maximization

A competitive firm produces output using three fixed factors and one variable factor. The firm's short-run production function is q = 305x - 2x², where x is the amount of variable factor used. The price of the output is $2 per unit and the price of the variable factor is $10 per unit. In the short run, how many units of x should the firm use?

Jiffy-Pol Consultants is paid $1,000,000 for each percentage of the vote that Senator Sleaze receives in the upcoming election. Sleaze's share of the vote is determined by the number of slanderous campaign ads run by Jiffy-Pol according to the function S = , where N is the number of ads. If each ad costs $10,000 approximately how many ads should Jiffy-Pol buy in order to maximize its profits?

A profit-maximizing competitive firm uses just one input, x. Its production function is q = 4 . The price of output is $12 and the factor price is $3. The amount of the factor that the firm demands is

When Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is 1 - bushels of corn. If the price of corn is $1 per bushel and the price of fertilizer is $.20 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

A competitive firm's production function is f(x₁, x₂) = 12 ₁ + 4 ₂. The price of factor 1 is $1 and the price of factor 2 is $2. The price of output is $4. What is the profit-maximizing quantity of output?

During the height of the pet rock craze in the 1970s, the price elasticity of demand was estimated to be 1.20. Since pet rocks have a marginal cost of zero, a profit-maximizing seller of pet rocks would

The production function is f(x₁, x₂) = _{1 2}. If the price of factor 1 is $12 and the price of factor 2 is $24, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

The weak axiom of profit-maximizing behavior states that in a modern mixed economy, firms have only a weak incentive to maximize profits.

During the height of the pet rock craze in the 1970s, the price elasticity of demand was estimated to be 1.80. Since pet rocks have a marginal cost of zero, a profit-maximizing seller of pet rocks would

The marginal product of a factor is just the derivative of the production function with respect to the amount of this factor, holding the amounts of other factor inputs constant.

The production function is given by f(x) = . If the price of the commodity produced is $60 per unit and the cost of the input is $10 per unit, how much profit will the firm make if it maximizes profits?

A profit-maximizing competitive firm uses just one input, x. Its production function is q = 4 . The price of output is $28 and the factor price is $7. The amount of the factor that the firm demands is

Diesel Dan is a contract truck driver. While his revenue is $2 per mile driven, the faster he drives, the greater the risk of a speeding ticket. The cost of driving his truck 1 hour at a speed of S miles per hour is C(S) = . To maximize his profit, Dan should drive

If there is perfect certainty, a competitive firm will necessarily

If a profit-maximizing competitive firm has constant returns to scale, then its long-run profits must be zero.

When Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is 1 - bushels of corn. If the price of corn is $2 per bushel and the price of fertilizer is $.40 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

Jiffy-Pol Consultants is paid $1,000,000 for each percentage of the vote that Senator Sleaze receives in the upcoming election. Sleaze's share of the vote is determined by the number of slanderous campaign ads run by Jiffy-Pol according to the function S = , where N is the number of ads. If each ad costs $3,600 approximately how many ads should Jiffy-pol buy in order to maximize its profits?

A competitive firm's production function is f(x₁, x₂) = 8 ₁ + 8 ₂. The price of factor 1 is $1 and the price of factor 2 is $3. The price of output is $6. What is the profit-maximizing quantity of output?

The production function is f(x₁, x₂) = _{1 2}. If the price of factor 1 is $6 and the price of factor 2 is $12, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

A profit-maximizing competitive firm uses just one input, x. Its production function is q = 8 . The price of output is $24 and the factor price is $8. The amount of the factor that the firm demands is