Question

Question Completion Status: If the firm's marginal cost is $10 and in the short run capital is fixed, with wages for workers at $40 per hour what must the worker's marginal product per hour bel 510 540 400 If the Marginal Product of capital is 6 and the Marginal Product of laboris 3; the prices of capital and labor are 510 and 12 respectively. What should the manager do Increase output Substitute in more labor for less capital Pay workers less Substitute in more capital for less labor In an increasing cost industry, expansion of output causes input prices to rise as demand for them grows. leaves input prices constant as input demand grows. causes economies of scale to occur. occurs under conditions of increasing returns to scale. Click Save and Submit to save and submit. Click Save All Answers to save all answers. Type here to search,

please answer all 3

Answer 1

The post contained 6 questions, of which the student sought help in 3. But exactly which 3 questions the student sought help in was not clear. Therefore, all 6 questions are being answered.

1. The firm’s marginal cost is $10. This means the firm must incur $10 to increase the output by 1 unit. The firm pays $40 to employ an additional hour of labor. Since spending $10 increases output by 1 unit, the additional labor worth $40 must be increasing the output by 4 units. Therefore, the marginal product of labor is 4. The third option is correct.

2. The marginal product from spending an extra dollar on capital is 0.60 (= 6/10), and the marginal product from spending an extra dollar on labor is 1.50 (= 3/2). Since the latter figure is higher than the former, the firm should hire more labor and less capital. Therefore, the second option is correct.

3. In an increasing cost industry, the average cost of output in an industry increases as the output grows. This happens because an increase in output implies a greater demand for inputs, which causes the prices of inputs to rise. Therefore, the first option is correct.

4. The expected value of a basket with different outcomes is the sum of values of different outcomes multiplied by their respective probabilities. Therefore, the fourth option is correct.

5. Marginal cost function is derived by differentiating the cost function with respect to quantity. Differentiating the given cost function with respect to q, we get: MC = 12q. Therefore, the first option is correct.

6. In a constant cost industry, the average cost of output stays constant as the output grows or falls, implying a horizontal long run supply curve. Therefore, the second option is correct.