(a) The production function of Shell & John Co. is given as: Z= 4X² + 4XY + 6Y2; where, Z = output; and X & Y = inputs of production. a. Derive the MRTSXY of Shell & John Co. when X = 10 and Y = 20. (b)From part (a), is Shell & John Co. in equilibrium if both the input prices of X and Y are USD1.00 respectively? Why? (c)Based on your answer in part (b), derive the optimum values of X*, Y* and Z* if both inputs X and Y costs USD 1.00 respectively and cost constraints of USD 60.00 are assumed.

(a) The production function of Shell & John Co. is given as: Z= 4X² + 4XY + 6Y2; where, Z = output; and X & Y = inputs of production. a. Derive the MRTSXY of Shell & John Co. when X = 10 and Y = 20. (b)From part (a), is Shell & John Co. in equilibrium if both the input prices of X and Y are USD1.00 respectively? Why? (c)Based on your answer in part (b), derive the optimum values of X, Y and Z* if both inputs X and Y costs USD 1.00 respectively and cost constraints of USD 60.00 are assumed.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.7P

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