Assume a firm is attempting to minimize cost by selecting units of capital and units of labor in order to produce an output level at least as large as some specified output quota. Cost-minimizing choices are provided in the following table for a baseline scenario and new scenario.
Using the table, how did the new event affect the firm's use of labor?
It caused quantity demanded for labor to increase.
Cannot be determined.
It caused no change in quantity demanded for labor.
It caused conditional demand for labor to decrease.
It caused conditional demand for labor to increase.
It caused no change in conditional demand for labor.
It caused quantity demanded for labor to decrease.
Using the table, how did the new event affect the firm's use of capital?
It caused quantity demanded for labor to increase.
It caused no change in conditional demand for capital.
It caused no change in quantity demanded for capital.
It caused conditional demand for capital to decrease.
It caused quantity demanded for capital to decrease.
Cannot be determined.
It caused conditional demand for capital to increase.
Using the table, how did the new event affect the firm's total cost?
Total cost increased.
Total cost remained unchanged.
Cannot be determined.
Total cost decreased.
Using the table, how did the firm economically respond to the new event?
The firm employed fewer units of capital and fewer units of labor, which decreased total cost, in order to reach a lower output quota.
The firm employed fewer units of capital and more units of labor, which decreased total cost, in order to reach a lower output quota.
The firm employed more units of capital and fewer units of labor, which decreased total cost, in order to reach a lower output quota.
The firm employed more units of capital and more units of labor, which decreased total cost, in order to reach a lower output quota.
Homework Answers
a) It caused conditional demand for labor to decrease.
The firm earlier had 910 units of labor employed which after the
event were reduced to 888.
It indicates that the firm's demand for labor has decreased. The
conditional demand is considered a function of factors of
production for the specified output level.
b) It caused conditional demand for capital to decrease.
The firm has a specified level of output and for the sake of cost-cutting, it altered the use of factors of production which is labor and capital. According to the table, the units of capital employed has been decreased.
c) The total cost decreased.
Although, the firm has the same rate of wage and rental but it
employed fewer units of labor and capital which have decreased the
total cost.
d) The firm employed fewer units of labor and fewer units of
capital which decreased total cost, in order to reach a lower
output quota.
The firm has lowered its output marginally and it had the same rate of labor wage as well as capital rent. However, it employed fewer units of capital and labor to achieve that level of output which decreased the total cost.
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Given: Assume a firm is attempting to minimize cost by selecting units of capital and units of labor in order to produce an output level at least as large as some specified output quota
Equation Description: A firm is attempting to minimize total cost subject to sufficiently employing units of labor and u...
Equation Description: A firm is attempting to minimize total
cost subject to sufficiently employing units of labor and units of
capital to produce an output level at least as large as a specified
output quota. Total cost equals the cost to employing units of
labor plus the cost to employing units of capital. A firm's
production function is the product of two terms: the
first term is units of capital raised to the .25 power; and, the
second term is units...
produce 16000 units of output. What is the cost minimizing combination of capital and labor for...
produce 16000 units of output. What is the cost minimizing combination of capital and labor for this firm? What is it's minimized cost of producing 16000 units of output? 2.2 Problem 2 In a perfectly competitive market all firms (including potential entrants) have a total cost function given by TC(Q) = 100Q - QP + ', where Q is that firm's output. Therefore, each firm's average cost function is AC(Q) = 100-Q+ Qand each firm's marginal cost function is given...
2. Assume that a firm needs to produce 500 units of output and it has ability...
2. Assume that a firm needs to produce 500 units of output and it has ability to choose how much capital and labor to use as inputs. Firm's production function and marginal products of factors are 2VL, and MPK 100L ых 100K . Use this information to answer the following questions. In your computations keep at least three decimal places. (a) If initial wage w is $12.50 and rental rate of capital, r, is $17.50, find the cost-minimizing labor- capital...
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2. To produce 18 units of output a firm can hire either 9 workers or 3...
2. To produce 18 units of output a firm can hire either 9 workers or 3 machines. a. Let L denote workers and K denote machines. Write down a production function that represents this firm's production technology. (2 points) b. Let w denote the wage rate and r denote the rental rate of capital. Suppose wir = 0.4. Derive the firm's long run factor demand functions for labor and capital and the firm's long run cost function. (4 points) C....
Question 82 Not yet answered Points out of 1.oo Remove flag Scenario 14-2 Assume a certain firm is producing Q 1,000 units of output. At Q 1,000, the firm's marginal cost equals S20 and its avera...
Question 82 Not yet answered Points out of 1.oo Remove flag Scenario 14-2 Assume a certain firm is producing Q 1,000 units of output. At Q 1,000, the firm's marginal cost equals S20 and its average total cost equals $25. The firm sells its output for S30 per unit. Refer to Scenario 14-2. To maximize its profit, the firm should Select one: a. shut down. b. decrease its output but continue to produce. C. increase its output. O d. continue...
NEED ALL ANSWERS PLEASE Problem 3 [24 marks] A competitive firm uses two inputs, capital (k) and labour (), to produce...
NEED ALL ANSWERS PLEASE
Problem 3 [24 marks] A competitive firm uses two inputs, capital (k) and labour (), to produce one output, (y). The price of capital, W, is S1 per unit and the price of labor, wi, is SI per unit. The firm operates in competitive markets for outputs and inputs, so takes the prices as given. The production function is f(k,l) 3k025/025. The maximum amount of output produced for a givern amount of inputs is y(k, l)...
7. Assume that the long-run production function can be expressed as Q-SKL? Where Q is quantity...
7. Assume that the long-run production function can be expressed as Q-SKL? Where Q is quantity of output, K is the quantity of capital and L is the quantity of labor. If capital is fixed at 10 units in the short run then the short-run production function is: Q=10KL b. Q=50KL? Q=10L? d. 0=50L Q=500KL 8. For a linear total cost function: a. MC will be downward sloping b. MC = AVC c. AVC is upward sloping and linear d....
12. Learning by doing doctrine suggests that: a. MC shifts upward as current output increases b....
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1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13,...
1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13, ATC = $15, and MC = $14. In order to maximize profits, this monopolist should A) shut down B) decrease production and increase price. C) not change his output level, because he is currently at the profit-maximizing output level. D) increase production and reduce price. E) there is insufficient information to make a recommendation 2) 2) Consider a monopolist that is able to distinguish...
Equation Description: A firm is attempting to minimize total
cost subject to sufficiently employing units of labor and units of
capital to produce an output level at least as large as a specified
output quota. Total cost equals the cost to employing units of
labor plus the cost to employing units of capital. A firm's
production function is the product of two terms: the
first term is units of capital raised to the .25 power; and, the
second term is units...
produce 16000 units of output. What is the cost minimizing combination of capital and labor for this firm? What is it's minimized cost of producing 16000 units of output? 2.2 Problem 2 In a perfectly competitive market all firms (including potential entrants) have a total cost function given by TC(Q) = 100Q - QP + ', where Q is that firm's output. Therefore, each firm's average cost function is AC(Q) = 100-Q+ Qand each firm's marginal cost function is given...
2. Assume that a firm needs to produce 500 units of output and it has ability to choose how much capital and labor to use as inputs. Firm's production function and marginal products of factors are 2VL, and MPK 100L ых 100K . Use this information to answer the following questions. In your computations keep at least three decimal places. (a) If initial wage w is $12.50 and rental rate of capital, r, is $17.50, find the cost-minimizing labor- capital...
- Julia operates a cost-minimizing firm that produces a single output using labor (L) and capital (K). The firm's production function is Q f(L, K) = min{L, K}}. The per-unit price of labor is w = 1 and the per-unit price of capital is r = 1. Recently, the government imposed a tax on Julia's firm: For each unit of labor that Julia employs, she must pay a tax of £t to the government. (a) Graph the Q unit of...
2. To produce 18 units of output a firm can hire either 9 workers or 3 machines. a. Let L denote workers and K denote machines. Write down a production function that represents this firm's production technology. (2 points) b. Let w denote the wage rate and r denote the rental rate of capital. Suppose wir = 0.4. Derive the firm's long run factor demand functions for labor and capital and the firm's long run cost function. (4 points) C....
Question 82 Not yet answered Points out of 1.oo Remove flag Scenario 14-2 Assume a certain firm is producing Q 1,000 units of output. At Q 1,000, the firm's marginal cost equals S20 and its average total cost equals $25. The firm sells its output for S30 per unit. Refer to Scenario 14-2. To maximize its profit, the firm should Select one: a. shut down. b. decrease its output but continue to produce. C. increase its output. O d. continue...
NEED ALL ANSWERS PLEASE
Problem 3 [24 marks] A competitive firm uses two inputs, capital (k) and labour (), to produce one output, (y). The price of capital, W, is S1 per unit and the price of labor, wi, is SI per unit. The firm operates in competitive markets for outputs and inputs, so takes the prices as given. The production function is f(k,l) 3k025/025. The maximum amount of output produced for a givern amount of inputs is y(k, l)...
7. Assume that the long-run production function can be expressed as Q-SKL? Where Q is quantity of output, K is the quantity of capital and L is the quantity of labor. If capital is fixed at 10 units in the short run then the short-run production function is: Q=10KL b. Q=50KL? Q=10L? d. 0=50L Q=500KL 8. For a linear total cost function: a. MC will be downward sloping b. MC = AVC c. AVC is upward sloping and linear d....
12. Learning by doing doctrine suggests that: a. MC shifts upward as current output increases b. an increase in this period's output will cause future periods' long-run average cost curves to be lower c. The long-run average cost curve to increase at a smaller output d. the Law of Diminishing Returns to be violated e. none of the above 13. If given quantities of soap and shampoo can be produced together at a lower total cost than they could be...
1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13, ATC = $15, and MC = $14. In order to maximize profits, this monopolist should A) shut down B) decrease production and increase price. C) not change his output level, because he is currently at the profit-maximizing output level. D) increase production and reduce price. E) there is insufficient information to make a recommendation 2) 2) Consider a monopolist that is able to distinguish...
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