Question
In: Economics
Suppose the production function of PowerGuns Co. is given by Q = 25LK where Q is...
Suppose the production function of PowerGuns Co. is given by Q = 25LK
where Q is the quantity of guns produced in the month, L is the number of workers employed, and K is the number of machines used in the production. The monthly wage rate is $3,000 per worker and the monthly rental rate for a machine is $6,000. Currently PowerGuns Co. employs 25 workers and 40 machines. Assume perfect divisibility of labor and machines.
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What is the total cost of the current production of PowerGuns in a month? What is the average cost to produce a shooting gun? Assuming the number of machines does not change, what is the marginal cost of producing one additional gun?
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What is the law of diminishing returns? Does this production display this characteristic? Explain.
Solutions
Rahul Sunny answered 7 months agoRelated Solutions
Suppose the production function for widgets is given by q = kl -0.8k2- 0.2l2, where...
Suppose the production function for widgets is given by
q = kl -0.8k2- 0.2l2,
where q represents the annual quantity
of widgets produced, k represents annual capital input, and l
represents annual labor input.
Suppose k = 10; graph the total and average productivity of
labor curves. At what level of labor input does this average
productivity reach maximum? How many widgets are produced at that
point?
Again, assuming that k = 10, graph the MPL curve. At
what...
Suppose the production function for widgets is given by q = kl -0.8k2- 0.2l2, where...
Suppose the production function for widgets is given by
q = kl -0.8k2- 0.2l2,
where q represents the annual quantity
of widgets produced, k represents annual capital input, and l
represents annual labor input.
Suppose k = 10; graph the total and average productivity of
labor curves. At what level of labor input does this average
productivity reach maximum? How many widgets are produced at that
point?
Again, assuming that k = 10, graph the MPL curve. At
what...
A firm with a production function given by ?=170?q=170N, where ?q is the quantity produced and...
A firm with a production function given by ?=170?q=170N, where
?q is the quantity produced and ?N is the number of workers hired.
The firm sells its product in a competitive market, and the market
price of its good is ?=1p=1.
The firm, however, is the only employer in the town where it
operates, and hence it does not take the cost of labour as given.
The inverse labour supply function in this town is given by
?=50+0.02?2w=50+0.02N2.
(a) Write...
Suppose the production function for high-quality bourbon is given by Q = (K · L)1/2 where...
Suppose the production function for high-quality bourbon is
given by Q = (K · L)1/2 where Q is the
output of bourbon per week and L is labor hours per week. Assume
that in the short run, K is fixed at 144. Then, the short-run
production function becomes:
Q = 12L(1/2)
(A) If the rental rate of capital is $12 and wages are
$9 per hour, obtain the short-run total costs
function.
(B) If the SMC
for this firm is...
craft corp's production function is given by q = 5min(K, 2L),where q is the quantity...
craft corp's production function is given by q = 5min(K, 2L),
where q is the quantity produced and K and L are the amounts of
capital and labor input. Input prices are r = 2 and w = 6.a) find the long run cost functionb) draw the isoquants and isocost and show the equilibrium when
q = 2000. what is the total cost to produce q = 2000? what is the
labor cost to produce q = 2000? what is...
craft corp's production function is given by q = 5min(K, 2L), where q is the quantity...
craft corp's production function is given by q = 5min(K, 2L),
where q is the quantity produced and K and L are the amounts of
capital and labor input. Input prices are r = 2 and w = 6.
a) find the long run cost function
b) draw the isoquants and isocost and show the equilibrium when
q = 2000. what is the total cost to produce q = 2000? what is the
labor cost to produce q = 2000?...
Suppose that output Q is produced with the production function Q = f(K;L), where K is...
Suppose that output Q is produced with the production function Q
= f(K;L), where K is the number of machines used, and L the number
of workers used. Assuming that the price of output p and the wage w
and rental rate of capital r are all constant, what would the prot
maximizing rules be for the hiring of L and K? (b) What is
theMRTSK;L for the following production function: Q = 10K4L2? Is
this technology CRS, IRS or...
Suppose that output Q is produced with the production function Q = f(K,L), where K is...
Suppose that output Q is produced with the production function Q
= f(K,L), where K is the number of machines used, and L the number
of workers used. Assuming that the price of output p and the wage w
and rental rate of capital r are all constant, what would the profit
maximizing rules be for the hiring of L and K?
(b) What is the MRTSK,L for the following production function: Q =
10K4L2? Is this technology CRS, IRS...
Suppose that the production function is given by: ? = ?(?, ?) = ?(?)^1/3(?)^1/3 where ?...
Suppose that the production function is given by: ? = ?(?, ?) =
?(?)^1/3(?)^1/3
where ? > 0 is total factor productivity, ? indicates the
amount of capital employed and ? the amount of labor employed.
Wages are ? and the rental cost of capital is ?. Suppose that in
the short run capital is fixed, i.e., ? = ?bar. Moreover, the firm
must pay ??bar regardless of the production level
a) Solve the cost minimization problem. That is, determine...
Suppose the demand function for a given product is q = 5,400 - 2p2, where p...
Suppose the demand function for a given product is q = 5,400 -
2p2, where p is the price in dollars.
Find the price interval(s) where demand is elastic:
Find the price interval(s) where demand is inelastic:
show work
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