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A firm’s isoquant map is depicted below. Which of the following statements are true?
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- Consider a firm that produces output using industrial robots and skilled labor. Suppose it is the case that a reduction in the price of industrial robots causes the firm's labor demand curve for skilled workers to increase (i.e., to shift to the right). This implies that: There is diminishing marginal product of robots. O There is diminishing marginal product of skilled labor. O Robots and skilled labor are complements. O Robots and skilled labor are substitutes. The unit cost of skilled labor is below the unit cost of robots.Suppose that a firm cannot give up one input in exchange for the other and still maintain the same level of output. Calculate the elasticity of substitution in this case and elaborate on your answer.Suppose Mr. Saad is a producer of Lola Loo chocolate, following is the information available of his production plant. Quantity of Labour (L) Quantity of 1 2 3 4 5 Capital (K) 10 15 25 100 50 20 30 40 50 75 50 75 100 125 150200250 300 75 90 105 120 2 30 50 62 15 If K and Lare imperfect substitutes and complements from the information above draw at least three isoquant (map) and identify the level of production. H73 4
- Eva runs a small bakery in the village of Roggerli. She is debating whether she should extend her hours of operation. Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $12 per hour. Refer to Table 1-1. Using marginal analysis, how many hours should Eva extend her bakery's hours of operations? 2 hours 3 hours 4 hours 5 hoursSuppose that firms face the following production function: Q ==Inl +InK. What is the degree of elasticity of substitution? O 2/3 1/3 01 O infinityIf a firm has the production function f(k, I) = (2k1/4 + 14)" what is the firm's elasticity of substitution? O a. G = O b. o = O c. o = 1 O d. a = 2 O e. o = 4 114 -/2
- how to find the marginal rate of substitution for perfect complementscomplementary inputs occur where substitution is possible between the two * inputs True O FalsePrunella raises peaches where L is the number of units of labor she uses and T is the number of units of land she uses. Her output is f(L,T) = LT bushels of peaches. Currently, the cost of land is 8, the wage for labor is 9, and the price of peaches is 10. Prunella is currently maximizing her profits. Which occurences would cause the quantity of labor used to decrease? O An increase in the price of peaches O A increase in the price of labor O An increase in the Marginal Product of Labor O All of the above
- Florida citrus growers say that the recent crackdown on illegal immigration is increasing the market wage rates necessary to get their oranges picked. Some are turning to $100,000 to $300,000 mechanical harvesters known as “trunk, shake, and catch” pickers, which vigorously shake oranges from the trees. If widely adopted, what will be the effect on the demand for human orange pickers? What does that imply about the relative strengths of the substitution and output effects?What is the marginal rate of substitution at point A? Interpret this value.1. Recall the Cobb-Douglas production function we worked with in class, f (21, 2) What is the marginal rate of technical substitution (M RTS) based on this production func- 3 tion?