A firm produces output with capital and labor. Suppose currently the marginal product of labor is 28 and the marginal product of capital is 5. Each unit of labor costs $11 and each unit of capital costs $3. Is the firm minimizing the cost ofproduction? Explain.be the marginal product of labor, r be the price of capital, w be the cost of labor, and MRTS be the marginal rate of technical substitution.Let MPKbe the marginal product of capital, MPLThe firm isMPМPKA. not minimizing the cost of production becauserwMPKMPLB. not minimizing the cost of production because MRTS >MPKMPLC. minimizing the cost of production becauserMPKD. minimizing the cost of production because MRTS =MPLMPMPLKrO E. minimizing the cost of production becauseIf not, how could the firm decrease the cost of production holding output constant?and lessThe firm could decrease the cost of production holding output constant by using more

Answer to the question is as follows:

A firm produces output with capital and labor. Suppose currently the marginal product of labor is 28 and the marginal product of capital is 5. Each unit of labor costs $11 and each unit of capital costs $3. Is the firm minimizing the cost of production? Explain. Let MP be the marginal product of capital, MP, be the marginal product of labor, r be the price of capital, w be the cost of labor, and MRTS be the marginal rate of technical substitution. The firm is MPK MP, O A. not minimizing the cost of production because r MP, O B. not minimizing the cost of production because MRTS> MPL MPK MP O C. minimizing the cost of production because MP O D. minimizing the cost of production because MRTS = MPL MPK MPL O E. minimizing the cost of production because If not, how could the firm decrease the cost of production holding output constant? The firm could decrease the cost of production holding output constant by using more V and less

A firm produces output with capital and labor. Suppose currently the marginal product of labor is 28 and the marginal product of capital is 5. Each unit of labor costs $11 and each unit of capital costs $3. Is the firm minimizing the cost of production? Explain. Let MP be the marginal product of capital, MP, be the marginal product of labor, r be the price of capital, w be the cost of labor, and MRTS be the marginal rate of technical substitution. The firm is MPK MP, O A. not minimizing the cost of production because r MP, O B. not minimizing the cost of production because MRTS> MPL MPK MP O C. minimizing the cost of production because MP O D. minimizing the cost of production because MRTS = MPL MPK MPL O E. minimizing the cost of production because If not, how could the firm decrease the cost of production holding output constant? The firm could decrease the cost of production holding output constant by using more V and less

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Asap A firm has the following linear production function: Q = 6K + 9L The firm currently owns 10 units of capital (K) and hires 30 workers (L). A) What is the marginal product of labor? B)What is the marginal product of capital?
X and Y are factors of production. They are used to make a fixed output, Z, of the product. The isoquants are convex. If Z, the output produced is held constant, will a decrease in X's price always cause the quantity of Y being used to decrease? Explain and show in a graph.
I need help on this question
3. Elsa's handicrafts has the production function f(x1,x2) = (min{x1 ,2x2})2, where x, is the amount of plastic used, x, is the amount of labor used, and f(x1,x2) is the number of lawn ornaments produced. Let w, be the price per unit of plastic and w, be the wage per unit of labor. а. What is Elsa's cost function c(w1,w2,y)? b. If wi = w2 = 1, then what is Elsa's marginal cost of producing y units of output? What is the number of units of output that she would supply at price p? At these factor prices, what is her average cost per unit of output? c. If the competitive price of the lawn ornaments she sells is p = 48, and w, = w2 = 1, how many will she produce? How much profit will she make? d. More generally, at factor prices w, and w2, what is her marginal cost? At these factor prices and an output price of p, what is the number of units she will choose to supply?
I need help on this question
Show full answers and steps to the exercise
Suppose that the price of labor (the wage rate) is $100 a day and that the rental price of capital is $50 a day. Currently the Jedie Weapons Corporation is using ten units of capital and five units of labor to produce 500 lightsabers a day. Each lightsaber sells for $2. At the current input use levels, the marginal product of capital is 40 lightsabers per day and the marginal product of labor is 60 lightsabers a day. Is the firm making an economic profit at its current levels of operation? 2. Could the firm increase its profits at the current level of output by adjusting its use of labor and capital? If so, how should input use be adjusted?
If the marginal product of labor is 25 and the marginal product of capital 10, what is the marginal rate of technical substitution of labor for capital?
what are the privilages of familial capital
choose a correct answer
A laundry cleans white clothes using a production function q = B + 2G, where B is the number of cups of Clorox bleach, G is the number of cups of a generic bleach that is half as potent, and q is the basketfuls of clothes that are cleaned. Draw an isoquant for one basketful of clothes. What is the marginal product of B? What is the marginal rate of technical substitution at each point on an isoquant?
Exercise 11 Question Help Suppose that a firm's production function is: 112- q = 10L0.5K0.5 98- Its marginal product functions are: 84- MP, = 5KO.5/L0.5 - 0.5g/L 70- and MPK = 5L0.5/K.5 - 0.5g/K. 56- The cost of a unit of labor, w, is $50 and the cost of a unit of capital, r, is $50. Isoquants for output of 140 and 280 are illustrated in the figure to the right. 42- 28- Initially, the firm is producing 140 units of output and has determined that the cost-minimizing quantities of labor and capital are 14 and 14, respectively. 14- -q= 280 q= 140 98 Suppose now that the firm wants to increase output to 280 units. If capital is fixed 0- in the short run, how much labor will the firm require? 70 84 L, Units of labor 14 28 42 56 112 The firm will now require units of labor. (Enter your response rounded to two decimal places.) K, Units of capital