4. )At Alan's landscaping firm, labor is fixed in the short run. Increasing his use of capital always leads to additional output and his production function exhibits both increasing and diminishing marginal returns to capital at different points. Using a two-panel diagram, sketch the marginal, average, and total product of canitalat Alan's firm. Your diagram does not need to be to scale, but must be internally consistent and consistent with both the information given and economic theory. Explain your diagram and the relationship between the different curves.

4. )At Alan's landscaping firm, labor is fixed in the short run. Increasing his use of capital always leads to additional output and his production function exhibits both increasing and diminishing marginal returns to capital at different points. Using a two-panel diagram, sketch the marginal, average, and total product of canitalat Alan's firm. Your diagram does not need to be to scale, but must be internally consistent and consistent with both the information given and economic theory. Explain your diagram and the relationship between the different curves.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Production Total Product Total Fixed Cost Total variable cost Total Cost Average fixed cost Average variable cost Average Total Cost Marginal Cost 0 0 1 25 2 45 3 60 4 70 5 85 6 105 7 135 8 180 9 240 10 315 Assume that fixed costs are $50, labor is the only variable input and its costs are reflected completely in the costs above. Complete the table Graph AFC, AVC, ATC, and MC Explain how increasing returns and decreasing returns are depicted in your graph If the labor input increased by $10 at every unit of production, what would be the effect on your graphs?
3. We often work with production technologies that give rise to initially increasing marginal product of labor that eventually decreases. Are the following statements then True or False? Explain.The marginal product of labor becomes negative when the slope of the production frontier begins to get shallower as we move toward more labor input.
Discuss the content of the concepts of "short run" and "long run" as used in the theory of firm and relate them to returns to scale. 1.2 Give a formal definition of a separable production function, in words and mathematically; and provide a clear verbal description of what it means intuitively. 1.3 1.4 Why is duality in production of interest to a micro economist?
O Macmillan Learning One feature of production in the short run is diminishing marginal returns. The graph shows a total product curve for Barry's Ball Bearings. Identify the sections of the graph that illustrate increasing (IMR), diminishing, (DMR) and negative marginal returns (NMR). Output per hour 13 12 11 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Labor units IMR Answer Bank DMR NMR
5. The production function for gadgeadoodles uses a variable amount of labor and a fixed amount of capital to produce output. The production function exhibits diminishing returns to labor. Draw a correctly labeled graph of the production function in the space below. a.
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
1. Figure 1 shows the production function of a firm. Y В Y2 Y1 X X1 X2 a) What are the variables along (i) of the X axis? (ii) Y axis? b) Does the firm operate in the short term or long term? c) Referring to the diagram above, what is the level of input where (i) firms experiencing increased marginal output? (i) does the firm experience a declining marginal output? (i) the firm achieves maximum marginal output? (iv) the firm achieves a blank marginal output?
3. Suppose you are the new Manager of Kramerica Korporation, a firm which makes large rubber bladders for oil tankers with two inputs, capital and labor. On your first day, you discover that the marginal product of capital is 1,500, the price of capital (rent) is $100, the marginal product of labor is 500 and the price of labor (the wage rate) is $50. Based on these numbers, a. Is Kramerica employing its two inputs optimally? Explain your answer. b. What would you do as the new Manager, and why? Be specific!
2. Consider a Cobb-Douglas production function with three inputs. K is capital (the number of machines), L is labor (the number of workers), and H is human capital (the number of college degrees among the workers). The production function Y = K2/6 L3/6 H1/6 a) Derive an expression for the marginal product of labor. How does an increase in the amount of human capital affect the marginal product of labor? (Hint: The marginal product of labor MPL is found by differentiating the production function (Y) with respect to labor (L)) b) Derive an expression for the marginal product of capital. How does an increase in the amount of human capital affect the marginal product of capital? (Hint: The marginal product of capital MPK is found by differentiating the production function (Y) with respect to capital (K)).
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The Production Function for Wilson Company Economists at the Wilson Company are interested in developing a production function for fertilizer plants. They collected data on 15 different plants that produce fertilizer PLANT OUTPUT (TONS) CAPITAL ($) LABOUR (HOURS) 1 605.3 18,891 700.2 2 566.1 19,201 651.8 3 647.1 20,655 822.9 4 523.7 15,082 650.3 5 712.3 20,300 859.0 6 487.5 16,079 613.0 7…
3. The relationship between marginal product and marginal cost Brian's Big Burger is a small restaurant that sells hamburgers. For Brian, grills are a fixed input and workers are variable inputs. Assume that labor is Brian's only variable cost. Brian has a fixed cost of $100 per day and pays each of his workers $80 per day. Brian's total output schedule and total cost at each level of labor are presented in the following table. Fill in the blanks to complete the Marginal Product column for each worker and the Marginal Cost column at each level of labor. (Hint: Marginal cost is the change in total cost divided by the change in the quantity of output. You can calculate it here by dividing the increase in total cost from hiring one more worker by the marginal product from hiring one more worker.) Labor Input Total Output Marginal Product Total Cost Marginal Cost (Number of Workers) (Burgers per day) (Burgers per day) (Dollars per day) (Dollars per burger) $100 2$ 1 40 $180 2 120 $260 160…