16. Consider the production process undertaken by a firm. Which of the following would imply that the firm operates in the long run? a) The firm cannot find new workers quickly. b) The firm requires a lot of time to install new machines at the factory. c) The firm can obtain new factors of production as fast as it desires, without any constraint. d) The firm can not buy new real estate to establish a new factory. 17. Assume that the level of capital is fixed, and more workers are added to the production process. It is observed that the marginal product of the last worker eventually falls. This is referred to as: a) Diminishing marginal utility c) Crowding out b) Law of diminishing marginal returns d) Decreasing returns to scale

16. Consider the production process undertaken by a firm. Which of the following would imply that the firm operates in the long run? a) The firm cannot find new workers quickly. b) The firm requires a lot of time to install new machines at the factory. c) The firm can obtain new factors of production as fast as it desires, without any constraint. d) The firm can not buy new real estate to establish a new factory. 17. Assume that the level of capital is fixed, and more workers are added to the production process. It is observed that the marginal product of the last worker eventually falls. This is referred to as: a) Diminishing marginal utility c) Crowding out b) Law of diminishing marginal returns d) Decreasing returns to scale

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 3E

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2. The production function of a firm is estimated to be Q=f(K, L) = KL+ L. Market conditions require that the firm produce 200 units of output. Wage rate (w) is equal to 2 TL, while the price of capital (r) is equal to 1 TL. How much labour (L) and capital (K) should be used by the firm? Assume that the market conditions lead the firm to produce 242 units. What would the firm's optimal choice of K and L be in the short run? How about long run? What is the loss caused by the firm's inability to change the combination of K and L immediately? (What is the extra cost to be incurred in the short run) a) b) c) d)
A farmer can grow wheat or corn. The unit profits for a bushel of each are the same. To grow wheat (W) and corn (C), the farmer requires four input factors: Capital (K), land (L), A-Fertilizer (A), and B-fertilizer (B). The production of one bushel of corn requires two units of capital and the production of one unit of wheat four units of capital. The farmer has 32 units of capital available. The production of one bushel of corn requires two units of land and the production of one unit of wheat one unit of land. The farmer has 20 units of land available. The production of one bushel of corn requires two units of A-Fertilizer, and no B-fertilizer. The farmer has 18 units A-Fertilizer available. The production of one bushel of wheat requires one unit of B fertilizer, and no A-fertilizer. The farmer has 6 units of B-Fertilizer available. The farmer wants to maximize profits. 1:Which formula describes the capital constraint? a C ≤ 16-1W b C ≤ 8-1W…
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A farmer can grow wheat or corn. The unit profits for a bushel of each are the same. To grow wheat (W) and corn (C), the farmer requires four input factors: Capital (K), land (L), A-Fertilizer (A), and B-fertilizer (B). The production of one bushel of corn requires two units of capital and the production of one unit of wheat four units of capital. The farmer has 32 units of capital available. The production of one bushel of corn requires two units of land and the production of one unit of wheat one unit of land. The farmer has 20 units of land available. The production of one bushel of corn requires two units of A-Fertilizer, and no B-fertilizer. The farmer has 18 units A-Fertilizer available. The production of one bushel of wheat requires one unit of B fertilizer, and no A-fertilizer. The farmer has 6 units of B-Fertilizer available. The farmer wants to maximize profits. 1: Assume, holding everything else constant, that the unit-profit for a bushel of wheat is now twice as high as…
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5. The following diagram displays isoquants for different combinations of labor and capital. To ensure that the production function is depicted correctly, provide the values for Q₁, Q2 and 23 on the graph so that the production displays (a) increasing returns to scale, (b) decreasing returns to scale, (c) constant returns to scale. Capital (K)| 1,000 100 10 0 10 100 Q₁ = 1,000 Q₂ Q35 Labor (L)
Please don't copy ans Economics You are the owner of a motorbike company that currently has two different factories, an old one and a new one. The old factory uses an old technology that requires large amounts of labor to produce motorbikes. The production technology for the old firm is given by Fo(L) = m*L^1/2 . The new factory uses a much more modern production technology given by Fn(L) = n*L^1/2 . a. What are costs as a function of output for each individual factory? b. Suppose that you want to produce 1000 motorbikes. How many motorbikes will you produce at the old factory and how many will you produce at the new factory? c. Derive an expression for the total cost of producing y motorbikes (assuming that you always divide production between the factories in the optimal way). How does this cost function compare to the individual factory cost functions? d. It turns out that you can upgrade your old factory to make it just as efficient as the new factory. To pay…
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24. A specific production process can be represented by the production function, f(x1, x2) = (x 1/2 + x 1/3) 3. A. How much x₁ could the firm give up if it wanted to use 1 extra unit of x2 and still wanted to produce an identical level of output? B. Labeling everything and being precise, draw the isoquant corresponding to q = 4. = 9. C. On the same graph, draw the isoquant corresponding to q D. Between the isoquants you just drew, does the production technology display decreasing, increasing, or constant returns to scale? E. Analytically determine whether the production process has global returns to scale that match your local results from part D. Recall that in order to claim global returns to scale, your result must hold for ALL possible values of x1 and x2.