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Consider a perfectly competitive firm that produces output using a wellbehaved production function y = f(x1,x2)....

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Economics

Consider a perfectly competitive firm that produces output usinga wellbehaved production function y = f(x1,x2). Let the price ofoutput be denoted by p, the price of input 1 be denoted by w1, andthe price of input 2 be denoted by w2.
j)  Suppose x2 is fixed at some level x2. Graph thesolution to the profit maximization problem where profit is maximizedby choosing x1. [Note that this profit maximization problem is theshort-run version of the profit maximization problem

(k) Suppose that our hypothetical firm operates in a perfectlycompetitive industry with free entry and exit. How much profit canthe firm expect to make in the long run? Why? Explain youranswer.

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The perfectly competitive rm produces output using a wellbehaved production function y fx1x2 Let the price of outputbe denoted by p the price of input 1 be denoted by w1 and theprice of input 2 be denoted by w2a It is given that x2 is fixed at some level x2Hence The production function becomes a function of x1 only inthe shortrun iey fx1x2 where x2 constantHence the Total Revenue from production isTR py pfx1x21Also the Total    See Answer
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