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3. Consider the following production function (lsoqua nt) IC2=Q2_Lk and values wah-$15, rth -$8 e) Find...
Suppose a firm produces an output level according to the simple production function: Q = 5...
Suppose a firm produces an output level according to the simple production function: Q = 5 L K, which implies M P L = 5 K and M P K = 5 L. Further suppose a firm must pay labor (L) a wage rate (w) of $5 per unit, and the rental rate (r) on capital (K) is $25 per unit. A. Find the marginal rate of technical substitution. B. Write the equation for the isocost line. What is the...
3. Suppose the production of Crocs is characterized by the production function Q = LK, where...
3. Suppose the production of Crocs is characterized by the production function Q = LK, where represents the number of pairs of Crocs produced. Suppose that the price of labor is $10 per unit and the price of capital is $1 per unit. a. Graph the isoquant for Q=121,000. b. On the graph you drew for part a, draw several isocost lines including one that is tangent to the isoquant you drew. What is the slope of the isocost lines?...
1 pts Question 10 Which of the following is most accurate about an isoquant? O The isoquant of a higher level of o...
1 pts Question 10 Which of the following is most accurate about an isoquant? O The isoquant of a higher level of output is always shown closer to the origin. 0 Anoutput level Q can only be produced by input combinations on its isoquant The isoquants of two different output levels cannot cross each other in the short run, but in the long run they may cross None of the above is correct. 1 pts Question 11 11. Which of...
Question 7 rding to the production function: uses labor and machines to produce output according to...
Question 7 rding to the production function: uses labor and machines to produce output according to the where Lis ALK) = 41/212, ere is the number of units of labor used and K is the amount of capita or is $40 per unit and the cost of employing capital is $10 per unit. mount of capital employed. The cost (0): On the graph below, draw an isocost line for this firm that includes combin capital and labor that cost $400...
(a) Consider the production function, q = 100K2L1.5 Calculate the marginal product of labor, MPL, and...
(a) Consider the production function, q = 100K2L1.5 Calculate the marginal product of labor, MPL, and the marginal product of capital,MPK. (c) Suppose that in the short run, the level of capital is fixed at K = 15. Write out the total product of labor curve. What is the marginal product of labor when L = 100? (d) Now consider two input combinations, (K = 5, L = 100) and (K = 20, L = 25). Which of the two...
2. Consider a firm producing pizza with production function q = KL, that faces input prices...
2. Consider a firm producing pizza with production function q = KL, that faces input prices w= $10 and r = $100 for labor and capital, respectively. a. Derive the isoquant equation. Find the isoquant of an output q = 1. Draw it in a figure with l in the horizontal axis and k in the vertical axis. b. Does this firm's production exhibit increasing, decreasing or constant returns to scale? Briefly explain c. Find the labor demand, and the...
Practice Questions: Firm Cost Minimization The production function of computers takes the following form: Q= K02L...
Practice Questions: Firm Cost Minimization The production function of computers takes the following form: Q= K02L 1. Based on the production function, find MRTS LK a. b. Mathematically show that MRTS,K diminishes as the firm uses more labor. Suppose currently the company uses 3 units of K, and 2 units of L What is MRTS? What does the number tell you? c. Suppose the wage rate W= $8/hour and the rental rate of capital R $4/hour. Write an equation for...
Kent sells lemonade in a competitive market on a busy street corner. His production function is...
Kent sells lemonade in a competitive market on a busy street corner. His production function is F (L, K) = L(1/3)K(1/3) where output q is gallons of lemonade, K is the pounds of lemons he uses and L is the number of labour-hours spent squeezing them. The corresponding marginal products are MPL = 1L(−2/3)K(1/3)3 MPK = 1L(1/3)K(−2/3)3 Every pound of lemons cost r and the wage rate of lemon squeezers is w. (35 points) a. Prove that this production process...
2) Consider the following production function for shirts: q=13/4K1/4, where L is worker-hours, and K is...
2) Consider the following production function for shirts: q=13/4K1/4, where L is worker-hours, and K is sewing machine-hours. The cost of one hour of labor L is w The cost of renting a sewing machine for one hour is r. What type of returns to scale does this production function have? a) b) Compute the marginal product of labor L and marginal product of capital K. What is the marginal rate of technical substitution of labor for capital .e. how...
For questions 9-11, consider an example of a production function that relates the monthly production of...
For questions 9-11, consider an example of a production function that relates the monthly production of widgets to the monthly use of capital and labour services. Suppose the production function takes the following specific algebraic form: q = KL -(0.1)L? where q is the output of widgets, K is the input of capital services and L is the input of labor services. 9. Suppose that, in the short-run, K is constant and equal to 10. Fill in the table. |...
3. Suppose the production of Crocs is characterized by the production function Q = LK, where represents the number of pairs of Crocs produced. Suppose that the price of labor is $10 per unit and the price of capital is $1 per unit. a. Graph the isoquant for Q=121,000. b. On the graph you drew for part a, draw several isocost lines including one that is tangent to the isoquant you drew. What is the slope of the isocost lines?...
1 pts Question 10 Which of the following is most accurate about an isoquant? O The isoquant of a higher level of output is always shown closer to the origin. 0 Anoutput level Q can only be produced by input combinations on its isoquant The isoquants of two different output levels cannot cross each other in the short run, but in the long run they may cross None of the above is correct. 1 pts Question 11 11. Which of...
Question 7 rding to the production function: uses labor and machines to produce output according to the where Lis ALK) = 41/212, ere is the number of units of labor used and K is the amount of capita or is $40 per unit and the cost of employing capital is $10 per unit. mount of capital employed. The cost (0): On the graph below, draw an isocost line for this firm that includes combin capital and labor that cost $400...
2. Consider a firm producing pizza with production function q = KL, that faces input prices w= $10 and r = $100 for labor and capital, respectively. a. Derive the isoquant equation. Find the isoquant of an output q = 1. Draw it in a figure with l in the horizontal axis and k in the vertical axis. b. Does this firm's production exhibit increasing, decreasing or constant returns to scale? Briefly explain c. Find the labor demand, and the...
Practice Questions: Firm Cost Minimization The production function of computers takes the following form: Q= K02L 1. Based on the production function, find MRTS LK a. b. Mathematically show that MRTS,K diminishes as the firm uses more labor. Suppose currently the company uses 3 units of K, and 2 units of L What is MRTS? What does the number tell you? c. Suppose the wage rate W= $8/hour and the rental rate of capital R $4/hour. Write an equation for...
2) Consider the following production function for shirts: q=13/4K1/4, where L is worker-hours, and K is sewing machine-hours. The cost of one hour of labor L is w The cost of renting a sewing machine for one hour is r. What type of returns to scale does this production function have? a) b) Compute the marginal product of labor L and marginal product of capital K. What is the marginal rate of technical substitution of labor for capital .e. how...
For questions 9-11, consider an example of a production function that relates the monthly production of widgets to the monthly use of capital and labour services. Suppose the production function takes the following specific algebraic form: q = KL -(0.1)L? where q is the output of widgets, K is the input of capital services and L is the input of labor services. 9. Suppose that, in the short-run, K is constant and equal to 10. Fill in the table. |...
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