11. A firm in a perfectly competitive market uses capital and labor to produce output q. The firm's production function is F(L, K) = L0.5 K0.5. The prices of labor and capital are w = 4 and r = 1. The firm chooses the inputs in order to minimize its costs. Use this information to answer questions #11-12. What is the optimal mix of labor and capital? a. L= 4K b. K= 4L c. K= 2L d. L= 2K e. L=K 12. Using the information about the firm in the previous question, how much labor and capital will it hire if the production target is q = 4? a. L=2 and K = 8 b. L = 4 and K = 4 c. L=8 and K = 2 d. L = 1 and K = 16 e. L=2 and K = 2
11. A firm in a perfectly competitive market uses capital and labor to produce output q. The firm's production function is F(L, K) = L0.5 K0.5. The prices of labor and capital are w = 4 and r = 1. The firm chooses the inputs in order to minimize its costs. Use this information to answer questions #11-12. What is the optimal mix of labor and capital? a. L= 4K b. K= 4L c. K= 2L d. L= 2K e. L=K 12. Using the information about the firm in the previous question, how much labor and capital will it hire if the production target is q = 4? a. L=2 and K = 8 b. L = 4 and K = 4 c. L=8 and K = 2 d. L = 1 and K = 16 e. L=2 and K = 2
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
100%
I need 11 and 12 please!!
Transcribed Image Text:9. There are currently 60 perfectly competitive firms producing output q. The cost function of each firm is C =
10 + 3q2. The demand in this market is Qº = 1200 – 40p. Use this information to answer questions #9-
10. What is the short-run market equilibrium price in this market?
a. $0.55
b. $3
c. $4
d. $12
e. $24
10. Based on the information from the previous questions, is this market currently in a long-run equilibrium?
a. Yes, there will be no entry or exit in the long-run.
b. Yes, firms will enter the market in the long-run.
c. Yes, firms will exit the market in the long-run.
d. No, firms will exit the market in the long-run.
e. No, firms will enter the market in the long-run.
11. A firm in a perfectly competitive market uses capital and labor to produce output q. The firm's production
function is F(L, K) = L0.5 K0.5. The prices of labor and capital are w = 4 and r = 1. The firm chooses the
inputs in order to minimize its costs. Use this information to answer questions #11-12. What is the optimal
mix of labor and capital?
a. L=4K
b. K= 4L
с.
K = 2L
d. L= 2K
e. L= K
12. Using the information about the firm in the previous question, how much labor and capital will it hire if the
production target is q
4?
a. L= 2 and K
= 8
b. L = 4 and K = 4
c. L = 8 and K = 2
d. L = 1 and K
= 16
е.
L = 2 and K = 2
13. The figure below represents the marginal cost of a small firm in a perfectly competitive market. The firm's
fixed cost is $100. If the current market price is p
maximizes profit, then the firm's total profit will be
$20, and the firm is producing the quantity that
a. $100
b. $170
c. $200
d. $370
MC
30
e. $400
20
10
10
20
30
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