Consider the following profit function has been obtained from technology that uses single input.

Question

Consider the following profit function has been obtained from technology that uses single input.

π(P, W)=P²W^B , were P is the output price and W is input price and B is bitter parameter value.
a) For which value of bitter parameter the profit function of the product and demand for inout.

Answer 1

The value of the bitter parameter that will maximize the profit function and demand for input will depend on the specific market conditions. Generally, a higher value of the bitter parameter will lead to higher profits, but it may also lead to a decrease in demand for the input.