1, If the wage rate 'w' is $40 and the cost of capital is $40, calculate the average cost of producing 2,000 units in the long-run. 120- 110- AC = $ (round your answer to the nearest penny). 100- In the short-run, with the amount of capital fixed at 40 units, average total cost of 90- producing 2,000 units is V long-run average costs. 80- 70- 60- C (49,49) 50- A ---- B (40,40) 40- K= 40 C' 30- q = 3000 9 = 2,000 20A (28,28) 10- q = 1,000 20 :60 0- 20 40 60 80 100 120 140 Capital

1, If the wage rate 'w' is $40 and the cost of capital is $40, calculate the average cost of producing 2,000 units in the long-run. 120- 110- AC = $ (round your answer to the nearest penny). 100- In the short-run, with the amount of capital fixed at 40 units, average total cost of 90- producing 2,000 units is V long-run average costs. 80- 70- 60- C (49,49) 50- A ---- B (40,40) 40- K= 40 C' 30- q = 3000 9 = 2,000 20A (28,28) 10- q = 1,000 20 :60 0- 20 40 60 80 100 120 140 Capital

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Could I have help finding the long run TC, AC, and MC?
Consider the following figure for short run production: Total Product Stage I Stage II Stage III В E Labor
30 L* Output 0 10 20 30 40 50 60 70 100 The price of labour is $30 per unit and the price of capital is $60 per unit. The 30th unit of output adds $ 20 32 66 To produce 20 units of output the firm needs to hire 60 K* 12 26 To produce 70 units of output the firm needs to hire 52 to long-run total cost. The Long Run Average Cost of producing 50 units of output is $ The Long Run Total Cost of producing 60 units of output is $ LTC 1080 3060 units of labour. 8400 units of capital. LAC 72 97.5 LMC 36 114
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14. A firm uses labour, L and capital K, to produce a single product, X. capital is fixed but labour is variable. The firm's production function is: X=-0.2L + 18L? + 1620L. Where X is the number of units of the product per week, and L is the number of persons employed. A. At what weekly output is marginal cost equal to average variable cost? B. if the price of the product is $0.20 per unit, what is the maximum weekly wage that the firm would pay rather than close down?
KA
3. Production: a. State the decision rules used for finding the optimal amount of input(s) in both short-run and long-run production” b. Using your own words, explain the rationale behind each stated rule as if you were explaining them to someone who has not yet completed: c. The Demand for Labor is the visualization of what important short-run production concept, and what would shift this demand curve to the right? d. Use your answer above to explain why some worker (labor) earn much more than others, and why some workers are at a risk of losing their jobs to machines (capital). e. Explain why a Cobb-Douglas production function such as Q = LaKb s much more realistic than production functions such as Q = aL + bK
K Suppose that a firm's production function is q=5x in the short run, where there are fixed costs of $1,000, and x is the variable input whose cost is $625 per unit. What is the total cost of producing a level of output q? In other words, identify the total cost function C(q). The total cost of producing ya level of output q is A. C(q)= 1,000. OB. OC. OD. OE C(q)= 1,000+ C(q)= 1,000+ C(q) = 1,000+ 625q² C(q)= 25 q² 25 625q² 25 0.5 q B Dollars per unit of output 2000- 1800- 1600- 1400- 1200- 1000- 800- 600 400- 200- a 12 14 10 Quantity nchack 18 (1) Incorrect
Question When do firms decide to shut down production in the short run? Explain it. How is the short run average cost curve and the long run average cost curve shaped? What is the difference between them? Graphical representation of the short-run total cost curve showing total cost, fixed cost, variable cost: and The marginal cost and average total cost:
MC Qu. 41 If the variable cost curve is a straight... If the variable cost curve is a straight line, then the marginal cost curve will be horizontal. marginal cost curve is upward sloping. Omarginal cost curve will be U-shaped. Omarginal cost curve may be U-shaped.
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