Homework Answers
ANswer
Option 1
Less labor as a consequence of the output effect
The labor and capital are compliment inputs mean both are used together, so an increase in the price of capital decreases the quantity of capital and needs to decrease labor because both are used in proportion.
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If production technology to manufacture a certain product dictates that labor and capital must be used...
Consider the following diagram, which shows the production isoquants for a cost-minimizing firm with labor and...
Consider the following diagram, which shows the production isoquants for a cost-minimizing firm with labor and capital inputs. Capital Labor Based on the diagram, which of the following statements are true? Choose one or more: O A. The firm is unable to substitute inputs for each other and maintain constant levels of production. OB. The firm is unable to switch from one output level to another. OC. The firm can switch from one output level to another output level costlessly....
1. How does a profit-maximizing firm that is operating in a competitive labor market respond to...
1. How does a profit-maximizing firm that is operating in a competitive labor market respond to an increase in the wage rate? A. The firm will demand less capital due to the substitution effect. B. The firm will demand more labor due to the substitution effect. C. The firm will produce less output due to the scale effect. D. The firm will demand more capital due to the scale effect. E. The firm will demand more labor due to the...
5. The marginal product of labor in the production of computer chips is 50 chips per...
5. The marginal product of labor in the production of computer chips is 50 chips per hour. The marginal rate of technical substitution of hours of labor for hours of machine capital is 1/2. What is the marginal product of capital? 6. Suppose that a firm's production function is q = 10LT/2K1/2. The cost of a unit of labor is $20 and the cost of a unit of capital is $80. a. The firm is currently producing 100 units of...
QUESTION 22 If the Marginal Product of capital is 6 and the Marginal Product of labor...
QUESTION 22 If the Marginal Product of capital is 6 and the Marginal Product of labor is 3; the prices of capital and labor are $10 and $2 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 long-run production function, we assume that: Capital and technology are fixed, but firms can add...
In long-run production function, we assume that: Capital and technology are fixed, but firms can add labor to increase output. Capital and labor are fixed, but firms can change the technology they use to increase output. Labor and technology are fixed, but firms can add capital to increase output. Technology is fixed, but firms can add both labor and capital to increase output Capital, labor, and technology are fixed and output can be decreased but not increased.
Assume that a firm has a fixed-proportions production function, in which one unit of output is produced using one worker and two units of capital. If the firm has an extra worker, say two workers, and no more capital, it still can produce only one unit of
Assume that a firm has a fixed-proportions production function, in which one unit of output is produced using one worker and two units of capital. If the firm has an extra worker, say two workers, and no more capital, it still can produce only one unit of output. Similarly, an extra unit of capital does the firm no good.a) Draw the isoquants for this production function.b) Draw the total product, average product, and marginal product of labor curves (you will...
4. Consider a firm that uses both labor and capital in production. The price of capital...
4. Consider a firm that uses both labor and capital in production. The price of capital is $20 per unit and the wage rate is S10 per hour. a. Draw the firm's isocost line assuming a total production cost of $100. How steep is this line (that is, what is its slope)? Be sure to clearly label the axes. (3 points) b. Suppose the wage drops to $5 per unit. In which direction does the substitution effect change the firm's...
4. Consider a firm that uses both labor and capital in production. The price of capital...
4. Consider a firm that uses both labor and capital in production. The price of capital is $20 per unit and the wage rate is $10 per hour. Draw the firm's socost ine assuming a total production cost of $100. How steep is this line (that is, what is its slope)? Be sure to clearly label the axes. (3 points) b. Suppose the wage drops to S5 per unit. In which direction does the substitution effect change the firm's demand...
4. Consider a firm that uses both labor and capital in production. The price of capital...
4. Consider a firm that uses both labor and capital in production. The price of capital is $20 per unit and the wage rate is $10 per hour Draw the firm's isocost line assuming a total production cost of $100. How steep is this line (that is, what is its slope)? Be sure to clearly label the axes. (3 points) Suppose the wage drops to $5 per unit. In which direction does the substitution effect change the firm's demand for...
A firm can manufacture a product according to the production function: Q = F(K, L) =...
A firm can manufacture a product according to the production function: Q = F(K, L) = K3/4L1/4. Instruction: Enter your responses rounded to three decimal places. a. Calculate the average product of labor, APL, when the level of capital is fixed at 81 units and the firm uses 16 units of labor. ____ What is the average product of labor when the firm uses 256 units of labor? ____ Instruction: The second response is the exponent on L in the...
Consider the following diagram, which shows the production isoquants for a cost-minimizing firm with labor and capital inputs. Capital Labor Based on the diagram, which of the following statements are true? Choose one or more: O A. The firm is unable to substitute inputs for each other and maintain constant levels of production. OB. The firm is unable to switch from one output level to another. OC. The firm can switch from one output level to another output level costlessly....
5. The marginal product of labor in the production of computer chips is 50 chips per hour. The marginal rate of technical substitution of hours of labor for hours of machine capital is 1/2. What is the marginal product of capital? 6. Suppose that a firm's production function is q = 10LT/2K1/2. The cost of a unit of labor is $20 and the cost of a unit of capital is $80. a. The firm is currently producing 100 units of...
4. Consider a firm that uses both labor and capital in production. The price of capital is $20 per unit and the wage rate is S10 per hour. a. Draw the firm's isocost line assuming a total production cost of $100. How steep is this line (that is, what is its slope)? Be sure to clearly label the axes. (3 points) b. Suppose the wage drops to $5 per unit. In which direction does the substitution effect change the firm's...
4. Consider a firm that uses both labor and capital in production. The price of capital is $20 per unit and the wage rate is $10 per hour. Draw the firm's socost ine assuming a total production cost of $100. How steep is this line (that is, what is its slope)? Be sure to clearly label the axes. (3 points) b. Suppose the wage drops to S5 per unit. In which direction does the substitution effect change the firm's demand...
4. Consider a firm that uses both labor and capital in production. The price of capital is $20 per unit and the wage rate is $10 per hour Draw the firm's isocost line assuming a total production cost of $100. How steep is this line (that is, what is its slope)? Be sure to clearly label the axes. (3 points) Suppose the wage drops to $5 per unit. In which direction does the substitution effect change the firm's demand for...
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