Question
In: Economics
Suppose a furniture manufacturer finds that the marginal rate of technical substitution of capital for labor...
Suppose a furniture manufacturer finds that the marginal rate of technical substitution of capital for labor in his production process is significantly less than the ratio of the rental rate on machinery to the wage rate for assembly-line labor.
a. Draw a graph representing the current state of the manufacturer.
b. Define the cost minimization rule for the manufacturer.
c. How should he change his use of capital and labor to minimize the cost of production? Show your answer in the same graph in question (a).
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
A firm chooses its input mix such that the marginal rate of technical substitution equals the...
A firm chooses its input mix such that the marginal rate
of technical substitution equals the ratio of input
prices.
A. This is cost minimizing input mix
B. This is profit maximizing input mix
C. This is both profit maximizing as well as cost minimizing
D. This is neither cost minimizing nor profit maximizing input
mix
This is a multiple choice question that has more than 1 right
answer.
Explain the concept of marginal rate of technical substitution. What does a MRTS of 4 mean?...
Explain the concept of marginal rate of technical substitution.
What does a MRTS of 4 mean? Is there any difference between
production function and Iso-quant? Explain institutively what might
cause the marginal product of labor to become negative.
1. Explain the concept of marginal rate of technical substitution. What does a MRTS of 4...
1. Explain the concept of marginal rate of technical
substitution. What does a MRTS of 4 mean? Is there any difference
between production function and Iso-quant? Explain institutively
what might cause the marginal product of labor to become
negative.
Suppose a firm's marginal product of capital and marginal product of labor schedules are as shown...
Suppose a firm's marginal product of capital and marginal
product of labor schedules are as shown in the table below. The
firm hires both capital and labor competitively for $5 and $8,
respectively. This assignment will be graded out of 6 points with 2
points possible for each question.
Capital
MP of Capital
Labor
MP of Labor
0
0
1
10
1
28
2
9
2
30
3
8
3
24
4
7
4
20
5
6
5
16
6...
Suppose a firm's marginal product of capital and marginal product of labor schedules are as shown...
Suppose a firm's marginal product of capital and marginal
product of labor schedules are as shown in the table below. The
firm hires both capital and labor competitively for $4 and $8,
respectively. Its output is sold in a competitive market for $.50
per unit.
Capital
MP of Capital
Labor
MP of Labor
0
0
1
10
1
28
2
9
2
30
3
8
3
24
4
7
4
20
5
6
5
16
6
5
6
12
7...
If marginal rate of substitution between wine and cheese is -1 and the marginal rate of...
If marginal rate of substitution between wine and cheese is -1
and the marginal rate of the product transformation between two
goods is -2, what should be done in this economy to increase
consumers’ utility? Support your answer by a graph.
assumption of diminishing marginal rate of substitution means that
assumption of diminishing marginal rate of substitution means
that
Suppose a consumer who has a marginal rate of substitution of current consumption for future consumption...
Suppose a consumer who has a marginal rate of substitution of
current consumption for future consumption that is a constant, b.
Determine how this consumer’s choice of current consumption, future
consumption, and savings depends on the market real interest rate
r, and taxes and income in the current and future periods. Show
this in diagrams.
1. The marginal rate of substitution is ________________ (Select all that apply)
1. The marginal rate of substitution is ________________ (Select
all that apply)a. Equal to the slope of the budget line at an optimal point if
the optimal point is not at a corner.b. How much of each good a consumer can afford.c. The amount of one good an individual would be willing to
trade for a different good and be just as well off.d. The slope of the indifference curve.e. Equal to the price ratio at an optimal point if...
1.14. What are the relationships among marginal utilities, the marginal rate of substitution, and the slopes...
1.14. What are the relationships among marginal utilities, the
marginal rate of substitution, and the slopes of indifference
curves?
1.15. Explain how the assumption that "a larger basket of
commodities is always preferred to a smaller one" implies (a) that
indifference curves lying farther out from the origin are
associated with higher utility values, (b) that marginal utilities
are positive, and (c) that indifference curves are downward
sloping.
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