Question
In: Economics
Consider a firm with the additive production function we discussed in class: f(K, L) = 2√...
Consider a firm with the additive production function we discussed in class: f(K, L) = 2√ L + 2√ K.
(a) Derive the firm’s long run demand curve for labor, as well as the firm’s long run demand curve for capital.
(b) Notice that the firm’s long run labor and capital demand curves do not exhibit any substitution effects. That is, if the price of labor increases, the firm’s use of capital does not change. Why do you think this is the case?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Consider the production function F(L,K) = L^2/3 K^2/3 . (f) Does this production function exhibit increasing,...
Consider the production function F(L,K) = L^2/3 K^2/3 .
(f) Does this production function exhibit increasing, decreasing
or constant returns to scale? Explain.
(g) Find the total cost, average cost and marginal cost of
producing y units of output. Is the average cost increasing or
decreasing in y? Is the marginal cost higher or lower than the
average cost?
Question 2 The production of magic chairs requires only two
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Consider the firm with production function given by q = f ( L , K )...
Consider the firm with production function given by q = f ( L ,
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producer surplus when the price increases from $16 to $32? (round
your answer to one decimal place if necessary)
Problem 2 Consider an economy described by the production function: Y = F(K,L) = K 1/2...
Problem 2
Consider an economy described by the production function: Y =
F(K,L) = K 1/2 L 1/2
a. What is the per- worker production function?
b. Assuming no population growth or technological progress, find
the steady- state capital stock per worker, output per worker, and
consumption per worker as a function of the saving rate and the
depreciation rate.
c. Assume that the depreciation rate is 10 percent per year.
Make a table showing steady-state capital per worker, output...
Suppose a production function is given by F ( K , L ) = K^(1/2) L^(1/2), the...
Suppose a production function is given by F ( K , L )
= K^(1/2) L^(1/2), the price of capital “r” is $16, and the price
of labor “w” is $16.
a. (5) What combination of labor and capital minimizes the cost of
producing 100 units of output in the long run?
b. (5) When r falls to $1, what is the minimum cost of producing
100 pounds of pretzels in the short run? In the long run?
c. (5) When...
The production function of a firm is given by F(K, L)=KL. Assume that capital (K) is...
The production function of a firm is given by F(K, L)=KL. Assume
that capital (K) is fixed at K=1 in the short run. Then the amount
of labor (L) needed to produce 4 unit of output is equal to
___.
The production function of a firm is given by F(K, L)=KL. Assume that capital (K) is...
The production function of a firm is given by F(K, L)=KL. Assume
that capital (K) is fixed at K=1 in the short run. Then the amount
of labor (L) needed to produce 4 unit of output is equal to ___.
Group of answer choices 16 1 4 8 2
Suppose a production function is given by F ( K , L ) = K 1 2...
Suppose a production function is given by F ( K , L )
= K 1 2 L 1 2, the price of capital “r” is $16, and the price of
labor “w” is $16.
a. (5) What combination of labor and capital minimizes the cost of
producing 100 units of output in the long run?
b. (5) When r falls to $1, what is the minimum cost of producing
100 pounds of pretzels in the short run? In the long...
2. Suppose a production function is given by F ( K , L ) = K 1...
2. Suppose a production function is given by F ( K ,
L ) = K 1 2 L 1 2, the price of capital “r” is $16, and the price
of labor “w” is $16.
a. (5) What combination of labor and capital minimizes the cost of
producing 100 units of output in the long run?
b. (5) When r falls to $1, what is the minimum cost of producing
100 pounds of pretzels in the short run? In the...
2. Consider a firm with the following production function: Q = K 1/3 L 2/3 (a)...
2. Consider a firm with the following production function: Q = K
1/3 L 2/3
(a) Consider an output level of Q = 100. Find the expression of
the isoquant for this output level.
(b) Find the marginal product of labor, MPL. Is it increasing,
decreasing, or constant in the units of labor, L, that the firm
uses?
(c) Find the marginal product of capital, MPK. Is it increasing,
decreasing, or constant in the units of capital, K, that the...
Consider a firm whose technology can be represented by the following Cobb-Douglas production function: , f(L,K)...
Consider a firm whose technology can be represented by the
following Cobb-Douglas production function: , f(L,K) =
L0.5K0.5, where L and K
represent labor and capital, respectively. In a new diagram, in
please draw an isoquant that represent an output level of 20
units.
Suppose the price of labor, w, is 1 and the price of
capital, r, is 2, and the firm’s budget, C, is
100. Please draw the firm’s isocost line in the same diagram.
Can the firm...
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