Question

please answer qs 11 and 12 asap plz

QUESTION 11 A firm wants to minimize the total cost of producing 100 tons of dynamite. The firm uses two factors of production, chemicals and labor. The combination of chemicals and labor that minimizes production costs will be found where the ratio of the amount of chemicals used to the amount of labor used equals the CA ratio of the marginal product of chemicals to the marginal product of labor the ratio of the amount of chemicals used to the amount of labor used equals the B. ratio of the price of chemicals to the wage rate c. the production of an additional unit of dynamite costs the same regardless of whether chemicals or labor are used D. the marginal products of chemicals and labor are equal QUESTION 12 At the current level of output, long-run marginal cost is $50 and long-run average cost is $75. This implies that: A. there are neither economies nor diseconomies of scale. B. the cost-output elasticity is greater than one. C there are economies of scale. D. there are diseconomies of scale.

Answer 1

11) When two inputs, labor and chemical are used, the production cost would be minimised when

MPl/w= MPk/r

ie the ratio of marginal product to the cost of input should be equal for both inputs. This would also imply that the production cost of an additional unit would be the same whether it is produced from chemical or labor because the ratios would be equal.

Hence answer would be option C)

12) If the long run marginal cost is less than the long run average cost, it implies that the cost of an additional unit of good is less. This means that as more and more units would be produced, the average cost would tend to decline.

This is known as the economies of scale.

Answer is option C) Economies of scale

(You can comment for doubts)