Black Diamond produces climbing shoes. They employ labor, l,…

Black Diamond produces climbing shoes. They employ labor, l, and capital, k to make their shoes. The amount of production (of pairs of shoes) for different amounts of labor and capital are . Their wage rate is, w=$4, their rental rate for capital is, r=$1. (a) (13 points) Find their cost minimizing level of l and k as a function of the amount of production.(b) (7 points) Imagine that the market price for a pair of shoes is p=$24, what level of production, maximizes Black Diamond’s profits?

Robert loves lemon and cherry Twizzlers. But, he must consum…

Robert loves lemon and cherry Twizzlers. But, he must consume them in equal proportions; otherwise the snack is revolting. His perfect complement demand curves are and (his whole $100 budget goes towards Twizzlers).    (a) (10 points) Imagine that the price of lemon Twizzlers falls from $4 to $2, find the substitution effect (and ).   (b) (10 points) Find the income effect when the price of lemon Twizzlers falls from $4 to $2 (and ).

Part of the way that governments try to make their populace…

Part of the way that governments try to make their populace healthier is by taxing soda, cigarettes, or alcohol. What is a subset of the population that these taxes might not work well on? Explain in detail the reason that their habits do not change in response to these taxes (it may be helpful to think about substitution and income effects). You can focus on just one of these goods or do a more general coverage.

You are running a bakery. The demand curve that you face to…

You are running a bakery. The demand curve that you face to sell creme brulees is . (a) (10 points) What is the price elasticity of demand for creme brulees?(b) (10 points) Imagine you can make creme brulees for free. Now your profit is just equal to your revenue. What price maximizes profits?