Question
In: Economics
2. A company currently uses 10 units of labor and 4 units of capital in its...
2. A company currently uses 10 units of labor and 4 units of capital in its production process and is able to produce 150 units of output per day.
a. Provide an isoquant that shows imperfect substitution between labor and capital and label the values that are described on your graph.
b. The company owner decides to use more capital and less labor in its production process. What should happen to the marginal product of capital relative to the marginal product of labor? Use intuition and math to explain your answer.
c. How would your isoquant change in part a. if capital and labor were perfect substitutes in production? Illustrate this on your graph and explain the change.
d. Re-answer your question to part b. if capital and labor are perfect substitutes.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
The firm is currently using 900 units of labor and 150 units of capital to produce...
The firm is currently using 900 units of labor and 150 units of
capital to produce 200,000 units of output. At this combination the
marginal product of labor is 25 and the marginal product of capital
is 60. The price of labor is $50 and the price of capital is
$30.
a. The MP per dollar of labor is _________ and the
MP per dollar of capital is _________.
b. The firm can increase capital by one unit and decrease...
A firm discovers that when it uses K units of capital and L units of labor...
A firm discovers that when it uses K units of capital
and L units of labor it is able to
produce q=4K^1/4
L^3/4 units of output.
Continue to assume that capital and labor can be hired at $40
per unit for labor and $10 for capital. In the long run if the firm
produces 600 units of output, how much labor and capital will be
used and what is the LR Total cost of production?
A firm discovers that when it uses K units of capital and L units of labor...
A firm discovers that when it uses K units of capital
and L units of labor it is able to
produce q=4K^1/4
L^3/4 units of output.
a) Calculate the MPL, MPK and MRTS
b) Does the production function (q=4K^1/4 L^3/4) exhibit
constant, increasing or decreasing returns to scale and
why?
c) Suppose that capital costs $10 per unit and labor can
each be hired at $40 per unit and the firm uses 225 units of
capital in the short run....
A firm is currently producing 100 widgets using 4 units of labor and 12 units of...
A firm is currently producing 100 widgets using 4 units of labor
and 12 units of capital. The firm's production
function exhibits constant returns to scale. How many units of
labor and capital are needed to produce 350 widgets?
Suppose your firm uses 2 inputs to produce its output: K (capital) and L (labor). the...
Suppose your firm uses 2 inputs to produce its output: K
(capital) and L (labor). the production function is q =
50K^(1/2)L^(1/2). prices of capital and labor are given as r = 2
and w = 8
a) does the production function display increasing, constant, or
decreasing returns to scale? how do you know and what does this
mean?
b) draw the isoquants for your firms production function using L
for the x axis and K for y. how are...
Question #4 A perfectly competitive firm is currently producing 10 units of output. Its current total...
Question #4
A perfectly competitive firm is currently producing 10 units of
output. Its current total
cost is $85 and its cost curves have the usual shapes. If the firm
increased output to 12
units, total cost would rise to $87. The firm’s fixed cost is $15.
Is Q = 10 the short-run profit-maximizing level of output for this
firm? Why or why not? Show your work and explain clearly your
reasoning. If you just show an answer with no...
Your Company uses a standard cost system. The labor standard is 10 units per 8-hour day...
Your Company uses a standard cost system. The labor standard is
10 units per 8-hour day at a standard cost of $15 per hour. Last
month employees worked 1,920 hours and produced 2,500 units. The
total labor cost during this period was $29,184. What was the labor
efficiency (Q) variance for this last pay period?
$816 Unfavorable
$816 Favorable
$1,200 Unfavorable
$1,200 Favorable
Q1: A firm uses physical capital, which is fixed at 4 units, and labour (L) to...
Q1: A firm uses physical capital, which is fixed at 4 units, and
labour (L) to make its product. The price of physical capital is
$250 per unit and the price of labour is $100 per unit.
a) Complete the following table by filling in the columns for
marginal product of labour (MPL), average product of
labour (APL), total fixed cost (TFC), total variable
cost (TVC), total cost (TC), average fixed cost (AFC), average
variable cost (AVC), average total cost...
Q1: A firm uses physical capital, which is fixed at 4 units, and labour (L) to...
Q1: A firm uses physical capital, which is fixed at 4 units, and
labour (L) to make its product. The price of physical capital is
$250 per unit and the price of labour is $100 per unit.
a) Complete the following table by filling in the columns for
marginal product of labour (MPL), average product of
labour (APL), total fixed cost (TFC), total variable
cost (TVC), total cost (TC), average fixed cost (AFC), average
variable cost (AVC), average total cost...
Q1: A firm uses physical capital, which is fixed at 4 units, and labour (L) to...
Q1: A firm uses physical capital, which is fixed at 4 units, and
labour (L) to make its product. The price of physical capital is
$250 per unit and the price of labour is $100 per unit.
a) Complete the following table by filling in the columns for
marginal product of labour (MPL), average product of
labour (APL), total fixed cost (TFC), total variable
cost (TVC), total cost (TC), average fixed cost (AFC), average
variable cost (AVC), average total cost...
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