Homework Answers
Isoquant is the locus of all possible combinations of capital and labor which can be produced at given level of output. The slope of isoquant is MRTS or marginal rate of technical substitution shows the tradeoff between the two inputs hence it is diminishing implies when more capital is used for production then some amount of labor is given up.
For a fixed proportion production function,
Q= min (K, L)
The shape of the function is L shaped and both inputs are usedin a definite proportion. The slope is not definate in this case.
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B) What happens to the MRTS as we move along an isoquant? How would you produce each level of out...
Use the graph: Capital Isoquant 2 Isoquant 1 Isocost Labor 50 60 100 8. What is the MRTS between points A and B? 9....
Use the graph: Capital Isoquant 2 Isoquant 1 Isocost Labor 50 60 100 8. What is the MRTS between points A and B? 9. What is the MRTS between points B and C? 10. What is the slope of the isocost curve if wages=$300 a week and the rental price of capital is $300 per week? 11. Which isoquant curve represents higher output? 12. If Isoquant 1 represents output of 3000, what is the cost minimizing combination of inputs to...
The following graph shows the isoquant representing the combinations of capital and labor needed to produce...
The following graph shows the isoquant representing the combinations of capital and labor needed to produce 10 left-handed can openers. Assume that diminishing marginal returns characterize the production function. (Hint: click a point on the graph to see its coordinates.) 500 450 400 360 300 LABOR (Workers) 260 + 200 160 + * 100 50 o 12 3 18 15 o 21 Using the information provided on the graph, complete the following table with the changes in capital and labor...
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...
TUTORIAL2 Chapter 7 Part 1 Key Concepts and Equations: Production Isoquant: shows all combinations of input...
TUTORIAL2 Chapter 7 Part 1 Key Concepts and Equations: Production Isoquant: shows all combinations of input quantities that yield the same level of output. Higher isoquant: higher level of output Marginal Rate of Technical Substitution: MRTS is the slope of the isoquant at any input combination. It tells us the rate at which we must increase the qty of input 2 per unit decrease in qty of input 1. MRTS diminishes as we move down the isoquant from left to...
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...
SHOW ALL WORK !!! a) What is an isoquant? Where do we use isoquants? b) What...
SHOW ALL WORK !!!
a) What is an isoquant? Where do we use isoquants? b) What are the properties of isoquants? c) Draw a representative family of isoquants for a standard Cobb-Douglas production function. 3. d) Suppose that a firm has 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 and no more capital, it can produce only one unit of output. Similarly,...
3) Consider the production function ? = 6? 0.3? 0.6 . The marginal products are ???...
3) Consider the production function ? = 6? 0.3? 0.6 . The marginal products are ??? = 1.8? −0.7? 0.6 and ??? = 3.6? 0.3? −0.4 . a. In the short run assume that capital is fixed at ? = 10. Derive formulas for the short-run Total Product (TP), Average Product (APL), and Marginal Product (MPL). Graph these three functions. b. In the long run, capital is not fixed. Graph the isoquant for ? = 6. Identify and label three...
Please show all work. Problem #3: Long-Run Labor Demand and Factor Substitutability Suppose there are two...
Please show all work.
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 output according to the following production function: Y = 30K + 10L The firm wants to produce 600 units of output. 1. Draw the isoquant that corresponds to that level of production (600 units) in a graph that has L on the horizontal axis and...
The following graph illustrates various cost lines (aka isocost lines), where units of labor are measured...
The following graph illustrates various cost lines (aka isocost lines), where units of labor are measured along the horizontal axis, units of capital are measured along the vertical axis. Assume the wage rate is $20 per unit of labor and the rental rate is $100 per unit of capital. - Isocost Lines (ICL) Units of Capital ICL3 ICL ICL 500 1 000 1 500 Units of Labor 2 000 2 500 3 000 Figure Description: Units of labor are measured...
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...
Use the graph: Capital Isoquant 2 Isoquant 1 Isocost Labor 50 60 100 8. What is the MRTS between points A and B? 9. What is the MRTS between points B and C? 10. What is the slope of the isocost curve if wages=$300 a week and the rental price of capital is $300 per week? 11. Which isoquant curve represents higher output? 12. If Isoquant 1 represents output of 3000, what is the cost minimizing combination of inputs to...
The following graph shows the isoquant representing the combinations of capital and labor needed to produce 10 left-handed can openers. Assume that diminishing marginal returns characterize the production function. (Hint: click a point on the graph to see its coordinates.) 500 450 400 360 300 LABOR (Workers) 260 + 200 160 + * 100 50 o 12 3 18 15 o 21 Using the information provided on the graph, complete the following table with the changes in capital and labor...
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...
TUTORIAL2 Chapter 7 Part 1 Key Concepts and Equations: Production Isoquant: shows all combinations of input quantities that yield the same level of output. Higher isoquant: higher level of output Marginal Rate of Technical Substitution: MRTS is the slope of the isoquant at any input combination. It tells us the rate at which we must increase the qty of input 2 per unit decrease in qty of input 1. MRTS diminishes as we move down the isoquant from left to...
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...
SHOW ALL WORK !!!
a) What is an isoquant? Where do we use isoquants? b) What are the properties of isoquants? c) Draw a representative family of isoquants for a standard Cobb-Douglas production function. 3. d) Suppose that a firm has 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 and no more capital, it can produce only one unit of output. Similarly,...
Please show all work.
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 output according to the following production function: Y = 30K + 10L The firm wants to produce 600 units of output. 1. Draw the isoquant that corresponds to that level of production (600 units) in a graph that has L on the horizontal axis and...
The following graph illustrates various cost lines (aka isocost lines), where units of labor are measured along the horizontal axis, units of capital are measured along the vertical axis. Assume the wage rate is $20 per unit of labor and the rental rate is $100 per unit of capital. - Isocost Lines (ICL) Units of Capital ICL3 ICL ICL 500 1 000 1 500 Units of Labor 2 000 2 500 3 000 Figure Description: Units of labor are measured...
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...
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