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5. Suppose that an economy has a fixed amount L* of homogeneous labour, and a fixed amount K*of h...
The negative of the slope of an isoquant on a tangent line a particular (L,K) bundle...
The negative of the slope of an isoquant on a tangent line a particular (L,K) bundle of factor inputs is equal to the __ Assume questions are ordered top to bottom as a, b, c, d. Fig. 2: Bank Contour Plot Production Function:Q(L,K)=104 Machines 100 100 100 300 500 700 900 hr/hr (K) Human Bank Tellers hr/hr (L) 0 2 0 40 60 80 100 Oratio of the wage rate to the capital rental rate (w/r) Omarginal rate of technical...
Suppose a firm has a production function given by Q=2K+L, where L is labor, K is...
Suppose a firm has a production function given by Q=2K+L, where L is labor, K is capital and Q is the quantity of output. Which of the following statements is WRONG? A. The firm is exhibiting constant returns to scale B. The firm’s marginal product of capital is constant C. The firm’s marginal product of labor is constant D. The firm’s marginal rate of technical substitution depends on the amount of inputs
1). Suppose that a firm uses inputs labour (L, measured in person hours) and capital (K, measured in machine hours) in...
1). Suppose that a firm uses inputs labour (L, measured in person hours) and capital (K, measured in machine hours) in the production of its output (Q) according to the production function Q min{2L, 3K} (a) Draw the isoquant line associated with 12 units of output. Measure K along the vertical axis and L along the horizontal axis. (b) Suppose that the price of labour is $2/person hour, and the price of capital is $4 / person hour. What is...
Let q = L½k½ denote the production function for a firm making long-run decisions
Let q = L½k½ denote the production function for a firm making long-run decisions, that is K (capital) and L (labor) are now variable. a. Place k on the Y-axis and L on the X-axis and illustrate an isoquant when q=100.b. Derive an expression for the MRTS (the marginal rate of technical substitution) for any level of q.
4. Below are production functions that turn capital (K) and labor (L) into output. For each...
4. Below are production functions that turn capital (K) and labor (L) into output. For each of the production functions below, state and PROVE whether it is Constant/Increasing/or Decreasing Returns to scale. That is, you want to see how production changes when you increase all inputs (K.L) by a factor of a, where a > 1: (4 points each) (a) F(K,L) =KİL (b) F(K,L) = min 4K, 2L] + 20 (c) F(K,L) = 4K +3L 5. For this problem you...
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...
Consider the production function given by y = f(L,K) = L^(1/2) K^(1/3) , where y is...
Consider the production function given by y = f(L,K) = L^(1/2) K^(1/3) , where y is the output, L is the labour input, and K is the capital input. (a) Does this exhibit constant, increasing, or decreasing returns to scale? (b) Suppose that the firm employs 9 units of capital, and in the short-run, it cannot change this amount. Then what is the short-run production function? (c) Determine whether the short-run production function exhibits diminishing marginal product of labour. (d)...
3. Yasmin (Y) and Xavier (X) run firms that produce goods using capital (K) and labor...
3. Yasmin (Y) and Xavier (X) run firms that produce goods using capital (K) and labor (L). They each have technologies such that the Marginal Product of Capital is given by L (the amount of labor hired by the firm) and the Marginal Product of Labor is given by K (the amount of capital used by the firm). Thus, for Yasmin, the marginal rate of technical substitution for her firm is given by where the subscript indicates that this is...
A firm produces output Q by using capital K and labor L in fixed proportions, i.e....
A firm produces output Q by using capital K and labor L in fixed proportions, i.e. Q = F (K ,L ) = min {K, L/3}. The price of a unit of labor is w = 6, the price of a unit of capital is r = 2 and the price of output is p = 20. a) Draw the isoquant for Q = 8. b) Find the marginal product of labor. Suppose that (in part c and d) the...
Suppose that a firm has a production function of the form q = f(k;l) = 2k2...
Suppose that a firm has a production function of the form q = f(k;l) = 2k2 + 312. Which of the following statements is true regarding the Marginal Rate of Technical Substitution (RTS = .)? MPk MP O a. The RTS depends only on the ratio O b. The RTS depends on both k and I and not only on the ratio O c. The RTS depends only on k Od. The RTS depends only on I
The negative of the slope of an isoquant on a tangent line a particular (L,K) bundle of factor inputs is equal to the __ Assume questions are ordered top to bottom as a, b, c, d. Fig. 2: Bank Contour Plot Production Function:Q(L,K)=104 Machines 100 100 100 300 500 700 900 hr/hr (K) Human Bank Tellers hr/hr (L) 0 2 0 40 60 80 100 Oratio of the wage rate to the capital rental rate (w/r) Omarginal rate of technical...
1). Suppose that a firm uses inputs labour (L, measured in person hours) and capital (K, measured in machine hours) in the production of its output (Q) according to the production function Q min{2L, 3K} (a) Draw the isoquant line associated with 12 units of output. Measure K along the vertical axis and L along the horizontal axis. (b) Suppose that the price of labour is $2/person hour, and the price of capital is $4 / person hour. What is...
4. Below are production functions that turn capital (K) and labor (L) into output. For each of the production functions below, state and PROVE whether it is Constant/Increasing/or Decreasing Returns to scale. That is, you want to see how production changes when you increase all inputs (K.L) by a factor of a, where a > 1: (4 points each) (a) F(K,L) =KİL (b) F(K,L) = min 4K, 2L] + 20 (c) F(K,L) = 4K +3L 5. For this problem you...
3. Yasmin (Y) and Xavier (X) run firms that produce goods using capital (K) and labor (L). They each have technologies such that the Marginal Product of Capital is given by L (the amount of labor hired by the firm) and the Marginal Product of Labor is given by K (the amount of capital used by the firm). Thus, for Yasmin, the marginal rate of technical substitution for her firm is given by where the subscript indicates that this is...
Suppose that a firm has a production function of the form q = f(k;l) = 2k2 + 312. Which of the following statements is true regarding the Marginal Rate of Technical Substitution (RTS = .)? MPk MP O a. The RTS depends only on the ratio O b. The RTS depends on both k and I and not only on the ratio O c. The RTS depends only on k Od. The RTS depends only on I
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