Suppose that there are two firms, Acme and Triple-A, each of which has a production function...
Suppose that there are two firms, Acme and Triple-A, each of which has a production function that depends on capital (K) and labor (L), or fi(Ki,Li), i = Acme or Triple-A. At the current resource allocation, Acme can substitute 4 units of K for 1 unit of L and maintain the same level of output, or in other words MRTS^ACME K,L= 4. Triple-A can substitute 2 units of K for 1 unit of L and still maintain the same level of output, or in other words MRTS^AAA K,L = 2. Is the current resource allocation Pareto efficient? Explain.
Homework Answers
Add Answer to:
Suppose that there are two firms, Acme and Triple-A, each of
which has a production function...
nformation P Flag question Consider a simple exchange economy where there are two producers, one producing...
nformation P Flag question Consider a simple exchange economy where there are two producers, one producing Good X and the other Y. There are in total 100 units of K and 800 units of L in the economy. The production function of X Is X (KxLx)=10 K40.42X0.6 and that of Y is Y(Ky, Ly)= 4Ky + Ly Currently, the X production is using 60 units of K and 60 units of L. Follow the steps below to check if the...
Information P Flag question Consider a simple exchange economy where there are two producers, one producing...
Information P Flag question Consider a simple exchange economy where there are two producers, one producing Good X and the other Y. There are in total 100 units of K and 800 units of L in the economy. The production function of X is X (Kx, Lx) = 4Kx + Lx and that of Y is Y(Ky, Ly)= Ky 10.4 L, 0.6 Currently, the y production is using 60 units of K and 60 units of L. Follow the steps...
8. Consider the production function Q = (-1/2 + K1/2)2/3, where L denotes labor and K...
8. Consider the production function Q = (-1/2 + K1/2)2/3, where L denotes labor and K denotes capital. How many of the following statements are true for this production function? • Production exhibits increasing returns to scale. • For each additional unit of labor, the firm must give up decreasing amounts of capital to maintain output. If the firm is currently using 2 units of labor and 8 units of capital, then according to the MRTS it can trade 2...
2. Suppose that a firm’s production function is Q = 10 L½ K½ and the unit...
2. Suppose that a firm’s production function is Q = 10 L½ K½ and the unit cost of labor is $20, capital is $80, and the product price is $12 per unit. The firm is currently producing 100 units of output and has determined that its cost minimizing quantities of labor and capital usage for this level of output is 20 and 5 respectively. The product price is $12 per unit. a. Determine the current total cost for 100 units,...
Problem #3: Long-Run Labor Dernand and Factor Substitutability Suppose there are two inputs in the production...
Problem #3: Long-Run Labor Dernand and Factor Substitutability Suppose there are two inputs in the production function, labor (L) and capital (K), which can be combined to produe Y units of output according to the following production function Y = 30K + 10L The firm wants to produce 600 units of output 1. Draw the ot that corresponds to that level of production (600 units) in a graph that has L on the horizontal axis and K on the vertical...
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...
19. Suppose that a more efficient way to produce a good is discovered, thus lowering production...
19. Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause a. no change in the supply curve, only a change in price b. a decrease in supply (a leftward shift of the supply curve) c. a movement up the supply curve d. a movement down the supply curve. e. an increase in supply (a rightward shift of the supply curve) If the quantity demanded changes substantially with...
All firms produce according to a Cobb-Douglas production function. This production function should look familiar to...
All firms produce according to a Cobb-Douglas production function. This production function should look familiar to you. It says that output Q is related to inputs K and L as: This production function implies that the cost-minimizing demand for capital will be Ou where w is the wage rate, r is the cost of capital, Q is output level, and α and β are parameters We will assume that α + β 1; this is the constant-returns-to-scale assumption we saw...
Problem #3: Long-Run Labor Demand and Factor Substitutability Suppose there are two inputs in the production...
Problem #3: Long-Run Labor Demand and Factor Substitutability Suppose there are two inputs in the production function, labor (L) and capital (K), which carn be combined to produce Y units of out put according to the following production function: Y-30K+10L The firm wants to produce 600 units of out put 1. Draw the isoquant that corresponds to that level of production (600 units) in a graph that has L on the horizontal axis and K on the vertical axis 2....
Question 4 a) For the production function f(L,K)= L13K2/3, find the long run cost function, marginal...
Question 4 a) For the production function f(L,K)= L13K2/3, find the long run cost function, marginal cost function and average cost function. (20 points) b) For the same production function above, find the short run variable cost function and total cost function when capital is fixed at 500 units. (10 Points) Question 5 Suppose inputs can be perfectly substituted at a constant rate of two units of labor for every one unit of capital, while producing the same level of...
nformation P Flag question Consider a simple exchange economy where there are two producers, one producing Good X and the other Y. There are in total 100 units of K and 800 units of L in the economy. The production function of X Is X (KxLx)=10 K40.42X0.6 and that of Y is Y(Ky, Ly)= 4Ky + Ly Currently, the X production is using 60 units of K and 60 units of L. Follow the steps below to check if the...
Information P Flag question Consider a simple exchange economy where there are two producers, one producing Good X and the other Y. There are in total 100 units of K and 800 units of L in the economy. The production function of X is X (Kx, Lx) = 4Kx + Lx and that of Y is Y(Ky, Ly)= Ky 10.4 L, 0.6 Currently, the y production is using 60 units of K and 60 units of L. Follow the steps...
8. Consider the production function Q = (-1/2 + K1/2)2/3, where L denotes labor and K denotes capital. How many of the following statements are true for this production function? • Production exhibits increasing returns to scale. • For each additional unit of labor, the firm must give up decreasing amounts of capital to maintain output. If the firm is currently using 2 units of labor and 8 units of capital, then according to the MRTS it can trade 2...
Problem #3: Long-Run Labor Dernand and Factor Substitutability Suppose there are two inputs in the production function, labor (L) and capital (K), which can be combined to produe Y units of output according to the following production function Y = 30K + 10L The firm wants to produce 600 units of output 1. Draw the ot that corresponds to that level of production (600 units) in a graph that has L on the horizontal axis and K on the vertical...
19. Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause a. no change in the supply curve, only a change in price b. a decrease in supply (a leftward shift of the supply curve) c. a movement up the supply curve d. a movement down the supply curve. e. an increase in supply (a rightward shift of the supply curve) If the quantity demanded changes substantially with...
All firms produce according to a Cobb-Douglas production function. This production function should look familiar to you. It says that output Q is related to inputs K and L as: This production function implies that the cost-minimizing demand for capital will be Ou where w is the wage rate, r is the cost of capital, Q is output level, and α and β are parameters We will assume that α + β 1; this is the constant-returns-to-scale assumption we saw...
Problem #3: Long-Run Labor Demand and Factor Substitutability Suppose there are two inputs in the production function, labor (L) and capital (K), which carn be combined to produce Y units of out put according to the following production function: Y-30K+10L The firm wants to produce 600 units of out put 1. Draw the isoquant that corresponds to that level of production (600 units) in a graph that has L on the horizontal axis and K on the vertical axis 2....
Question 4 a) For the production function f(L,K)= L13K2/3, find the long run cost function, marginal cost function and average cost function. (20 points) b) For the same production function above, find the short run variable cost function and total cost function when capital is fixed at 500 units. (10 Points) Question 5 Suppose inputs can be perfectly substituted at a constant rate of two units of labor for every one unit of capital, while producing the same level of...
Most questions answered within 3 hours.
-
1. Weights of
Pikachu’s in the wild are normally distributed with a mean of 13.2
lbs...
asked 28 seconds ago -
Using the table of standard reduction potentials, answer True or
False.
The reaction:
2Cu(s) + 2H+(aq)...
asked 1 minute ago -
What is the source of the Earth’s magnetic field in regard to
dynamo theory, inner core,...
asked 23 minutes ago -
Driving-forces analysis has
Multiple Choice
practical value and is basic to the task of thinking
strategically...
asked 24 minutes ago -
The following exchange rates are available to you to buy or
sell.
Mt. Fuji Bank
JPY120.00/USD...
asked 51 minutes ago -
Does smoking hurt the lungs of children’s who are exposed to
adult smoking?
Forced vital capacity...
asked 2 hours ago -
EXPLAIN HOW NEGATIVE AFFECTIVITY IS RELATED TO JOB SATISFACTION.
INCLUDE AN EXAMPLE. MUST BE ANSWERED TWO...
asked 2 hours ago -
On December 31, 2019, Lincoln Inc. sold a used industrial crane
for $660,000 cash. The original...
asked 3 hours ago -
a runner jogs 3.4 miles every morning. how many kilometers does
this represent
asked 4 hours ago -
A 60.80 gram sample of iron (with a heat capacity of 0.450
J/g◦C) is heated to...
asked 4 hours ago -
Question 1 2 pts
The preprocessor executes after the compiler.
False
True
Question 2 2 pts...
asked 5 hours ago -
Explain how a spinal cord injury above C3 could result in a
respiratory arrest
asked 5 hours ago