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The negative of the slope of an isoquant on a tangent line a particular (L,K) bundle...
The slope of the tangent line at A is very steep at A compared with B...
The slope of the tangent line at A is very steep at A compared with B because since there is not much labour at A but a lot of capital, labour has a high marginal product while capital has a low marginal product such that if labour is increased by a small amount, output increases by a lot, so, in order to get back onto the isoquant, capital must be taken away. Since capital is NOT very productive, it needs...
Problem 1: Isoquant, Isocost Cost Minimizing Approach to Factor Selection: Suppose that as part of the...
Problem 1: Isoquant, Isocost Cost Minimizing Approach to Factor Selection: Suppose that as part of the UNCCCC Paris Agreement Green New Deal Plan to rapidly reduce Greenhouse Gas Emissions (GHGs) and other local air pollutants, suppose the elected City Council of the City of K'jipuktuk (Halifax) puts into place a low GHG transport system. As part of the plan, K'jipuktuk Transit, has been electrifying and increasing the size of the city's Public Transit System. So, far to this end, suppose...
5. Suppose that an economy has a fixed amount L* of homogeneous labour, and a fixed amount K*of h...
5. Suppose that an economy has a fixed amount L* of homogeneous labour, and a fixed amount K*of homogeneous capital, to be used in producing outputs x and y) In an Edgeworth box having dimensions L and K* in input space, suppose the inputs are the absolute slope of the x isoquant (i.e., the marginal rate of technical substitution) is 1K/2L and the absolute slope of the y' isoquant (i.e., the marginal rate of technical substitution) İs l K/L indicate...
1. Consider the figure below illustrating an isoquant and isocost line for the ABC Fruit Company's...
1. Consider the figure below illustrating an isoquant and isocost line for the ABC Fruit Company's production of guavas: x 6 a. [2 pts] Given the isocost line shown above, if the wage rate (w) is 2 and total cost is 12, what is the price of capital, r? b. [5 pts) Suppose that the marginal product of labor (MPL) = 6 and the marginal product of capital (MPK) = 3 at point A in the figure. At point B,...
Given production function Q=f(K, L) = 8KL + √L where K is capital and L is labor.
Given production function Q=f(K, L) = 8KL + √L where K is capital and L is labor. a. Find marginal product of labor and marginal product of capital.b. Define what is marginal rate of technical substitution, MRTS. Calculate the MRTS for the above case.c. When K = 10, L = 16, what is the total output? Sketch this isoquant function on a diagram where K is the vertical axis and L is the horizontal axis.
You are given the following production function Q = K1/3L2/3, where Q is output, L is...
You are given the following production function Q = K1/3L2/3, where Q is output, L is labor, and K is capital. First, calculate the marginal product of capital and the marginal product of labor. Next, calculate the marginal rate of technical substitution of labor for capital, MRTSL,K. What does this tell you about the production function?
A. L=25; K=16 B. L=40; K=10 C. L=16; K=25 D. L=10; K=40 E. L=20; K=20 =...
A. L=25; K=16
B. L=40; K=10
C. L=16; K=25
D. L=10; K=40
E. L=20; K=20
= VE Lulu owns a firm that produces leggings. The production function is given by Q=2VKVL, so that MPL K and MPK = Q is Lulu's VL VK output, K is capital, L is labor, and MP is the marginal product. The wage (w)rate per worker (L) is $40 per day and rental rate (r) per unit of capital (K) is $10 per day. How...
Write a definition and draw a graph for the isoquant, assuming that the two factors of...
Write a definition and draw a graph for the isoquant, assuming that the two factors of production are capital (K) and labor (L). Explain the law of diminishing marginal returns and if it applies or not applies to a production function of the form Q = a + bL + cK. Assume that price of labor is w = 10, and the cost of capital is r = 20. Assume that the company Impaling Poles ‘r Us has the following...
Let q = L½k½ denote the production function for a firm making long-run decisions
Let q = L½k½ denote the production function for a firm making long-run decisions, that is K (capital) and L (labor) are now variable. a. Place k on the Y-axis and L on the X-axis and illustrate an isoquant when q=100.b. Derive an expression for the MRTS (the marginal rate of technical substitution) for any level of q.
2. For the following Cobb-Douglas production function, q = f(L,K) = _0.45 0.7 a. Derive expressions...
2. For the following Cobb-Douglas production function, q = f(L,K) = _0.45 0.7 a. Derive expressions for marginal product of labor and marginal product of capital, MP, and MPK. b. Derive the expression for marginal rate of technical substitution, MRTS. C. Does this production function display constant, increasing, or decreasing returns to scale? Why? d. By how much would output increase if the firm increased each input by 50%?
The slope of the tangent line at A is very steep at A compared with B because since there is not much labour at A but a lot of capital, labour has a high marginal product while capital has a low marginal product such that if labour is increased by a small amount, output increases by a lot, so, in order to get back onto the isoquant, capital must be taken away. Since capital is NOT very productive, it needs...
Problem 1: Isoquant, Isocost Cost Minimizing Approach to Factor Selection: Suppose that as part of the UNCCCC Paris Agreement Green New Deal Plan to rapidly reduce Greenhouse Gas Emissions (GHGs) and other local air pollutants, suppose the elected City Council of the City of K'jipuktuk (Halifax) puts into place a low GHG transport system. As part of the plan, K'jipuktuk Transit, has been electrifying and increasing the size of the city's Public Transit System. So, far to this end, suppose...
5. Suppose that an economy has a fixed amount L* of homogeneous labour, and a fixed amount K*of homogeneous capital, to be used in producing outputs x and y) In an Edgeworth box having dimensions L and K* in input space, suppose the inputs are the absolute slope of the x isoquant (i.e., the marginal rate of technical substitution) is 1K/2L and the absolute slope of the y' isoquant (i.e., the marginal rate of technical substitution) İs l K/L indicate...
1. Consider the figure below illustrating an isoquant and isocost line for the ABC Fruit Company's production of guavas: x 6 a. [2 pts] Given the isocost line shown above, if the wage rate (w) is 2 and total cost is 12, what is the price of capital, r? b. [5 pts) Suppose that the marginal product of labor (MPL) = 6 and the marginal product of capital (MPK) = 3 at point A in the figure. At point B,...
A. L=25; K=16
B. L=40; K=10
C. L=16; K=25
D. L=10; K=40
E. L=20; K=20
= VE Lulu owns a firm that produces leggings. The production function is given by Q=2VKVL, so that MPL K and MPK = Q is Lulu's VL VK output, K is capital, L is labor, and MP is the marginal product. The wage (w)rate per worker (L) is $40 per day and rental rate (r) per unit of capital (K) is $10 per day. How...
2. For the following Cobb-Douglas production function, q = f(L,K) = _0.45 0.7 a. Derive expressions for marginal product of labor and marginal product of capital, MP, and MPK. b. Derive the expression for marginal rate of technical substitution, MRTS. C. Does this production function display constant, increasing, or decreasing returns to scale? Why? d. By how much would output increase if the firm increased each input by 50%?
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