Consider a Firm with Two Technologies to Choose Between When

question 112

Essay

Consider a firm with two technologies to choose between when producing output.The cost function when using technology 1 is given by:
c₁(q)= 3600 + 65q + 36q²
The cost function when using technology 2 is given by:
c₂(q)= 900 + 900q +q^{2
Assume that the firm can only implement one of the two technologies at a time.}
a.If the firm wishes to produce output at the lowest per-unit cost,which technology should it choose and how much output should it produce?
b.Which technology should the firm choose if it wishes to produce 15 units of output? What about 25 units of output?

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Definitions:

Monetary Policy

The method used by a country's monetary authority to regulate the amount of money in circulation, typically aiming at a specific inflation or interest rate to promote economic stability and expansion.

Lender Of Last Resort

An institution, typically a country's central bank, that offers loans to banks or other financial institutions that are experiencing financial difficulty or are considered highly risky.

Open-Market Purchase

The buying of government securities by the central bank from the market to increase the money supply and decrease the interest rate.

Store Of Value

An asset that can be saved, retrieved, and exchanged in the future without significantly losing value.