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help with practice prelim?
Me and my fellow first years are struggling with a prelim question, and I'm wondering if anyone can help. Perhaps it'll be good practice for you!
Assume a firm has two inputs, L and k., to produce an output q using q=f(k,l). Also assume the firm maximizes profit per unit of L
Give first order conditions. Assume second order conditions are satisfied.
Does firm minimize cost of producing q? Does it use more or less of efficient quantity of L?
Suppose the firm operates in a competitive industry where all other firms maximize profit. Does the firm that maximizes profit per L choose inputs or output levels differently than other firms?
Last edited by finalweek; 03-01-2010 at 05:00 PM.
Originally Posted by Keyser-Soze
"Suppose the firm operates in a competitive industry where all other firms maximize profit. Does the firm that maximizes profit per L choose inputs or output levels differently than other firms?"
not necessarily chosse the same inputs or outputs
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