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Function of advertising in newspapers and magazines

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Q1) Sales are a function of advertising in newspapers and magazines (X, Y). 05S = XY2

Price of advertising in newspapers and magazines are Rs.5 and Rs.10 respectively. The total budget for advertising is Rs.105. For maximizing the sales, find out the best combination of advertisement in newspapers and magazines by using lagrangian multiplier. (Hint: Make equation of budget line with the help of above information).

Q2) Consider the following production function 05

TPL = 12L2 - 0.8L3

i) Determine the marginal product function(MPL)

ii) Determine the average product function (APL)

iii) Find the value of L that maximizes TPL

iv) Find the value of L that maximizes APL

v) Find the value of L that maximizes MPL

Q3) Suppose the following demand and supply function of a commodity. 15

Qd = 55 - 5P

Qs = -50 + 10P

After imposing tax, the new supply function is

Qs = -60 + 10P

i) Find out the equilibrium price and quantity before tax.

ii) Find consumer and producer surplus before tax.

iii) Determine government revenue and dead weight loss after tax.

Q4) A perfectly competitive firm has the following total cost function: 05

Total output Total Cost

0 20

1 30

2 42

3 55

4 69

5 84

6 100

7 117

How much will the firm produce if the price of the production the market is Rs. 14 per unit? How will it change its output if price rises to Rs. 16 per unit?

Reference no: EM132631358

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