The long run.A chair manufacturer hires its assembly-line labour for $18 an hour and calculates that the rental cost of its machinery is $6 per hour. Suppose that a chair can be produced using 4 hours of labour or machinery in any combination. The firm is currently using 1 hour of labour for every 3 hours of machine time. (Assume that labour is on the horizontal axis and capital is on the vertical axis).3. Graphically illustrate your answer by drawing an isoquant, an isocost line for the current combination of labour and capital and an isocost line for the optimal combination of labour and capital.An isocost corresponding to the optimal combination of labour and capital is [a vertical line, a horizontal line, an upward sloping straight line, an upward sloping curve which is not a straight line, a downward sloping straight line, a downward sloping curve which is not a straight line, L-shaped] has slope [ ] at the optimal combination of inputsAn isoquant corresponding to the optimal combination of labour and capital is [a vertical line, a horizontal line, an upward sloping straight line, an upward sloping curve which is not a straight line, a downward sloping straight line, a downward sloping curve which is not a straight line, L-shaped]has slope [ ] at the optimal combination of inputs

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Answered: A chair manufacturer hires its…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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The long run.

A chair manufacturer hires its assembly-line labour for $18 an hour and calculates that the rental cost of its machinery is $6 per hour. Suppose that a chair can be produced using 4 hours of labour or machinery in any combination. The firm is currently using 1 hour of labour for every 3 hours of machine time. (Assume that labour is on the horizontal axis and capital is on the vertical axis).

3. Graphically illustrate your answer by drawing an isoquant, an isocost line for the current combination of labour and capital and an isocost line for the optimal combination of labour and capital.

An isocost corresponding to the optimal combination of labour and capital
- is [a vertical line, a horizontal line, an upward sloping straight line, an upward sloping curve which is not a straight line, a downward sloping straight line, a downward sloping curve which is not a straight line, L-shaped]
- has slope [ ] at the optimal combination of inputs
An isoquant corresponding to the optimal combination of labour and capital
- is [a vertical line, a horizontal line, an upward sloping straight line, an upward sloping curve which is not a straight line, a downward sloping straight line, a downward sloping curve which is not a straight line, L-shaped]
- has slope [ ] at the optimal combination of inputs

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