A manager of a perfectly competitive firm observes the production function Y = 100K ¹/³L 2/3. The firm currently hires labor = 20 units at wage = $40 and capital = 5 units at rent = $60. To maximize profit, manager should hire labor and rent capital. less, less less, more more, less more, more

A manager of a perfectly competitive firm observes the production function Y = 100K ¹/³L 2/3. The firm currently hires labor = 20 units at wage = $40 and capital = 5 units at rent = $60. To maximize profit, manager should hire labor and rent capital. less, less less, more more, less more, more

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 8P

See similar textbooks

Related questions

Q: A cob Douglas production function for a firm is given as Q=4L ½K½. The firm has also established…

A: Cobb Douglas Production Function-It represents connection between its inputs( physical capital and…

Q: Suppose that a firm's fixed proportion production function is given by q= min(5k, 10L) a.Calculate…

A: Given: q= min(5k, 10L)

Q: The production function of a firm is f: R2 → R, (L, K) H→ 10L + 16K – 2L? – K?, and the per unit…

A: Production function : 10 L + 16K - 2L2 - K2 Let the cost of capital (K) be (r) & cost of labor…

Q: F(L, K) = (min{L, K})^1/3 i. Calculate the marginal product for each input, and indicate whether…

A: Marginal product of labor is rise in production value for unit rise in labor. Similar for marginal…

Q: Here is the production function for our local brewery's best-selling Halloween pumpkin beer: q =…

Q: 2. A firm uses capital (denoted by K) and labor (denoted by L) to produce hockey sticks. The firm's…

A: Production function describes the relationship between the quantity of output produced and the…

Q: You are running a small factory that uses labour (L) and capital (K) to produce output (Q). Your…

A: The production function shows the relationship between output and inputs. Change in inputs brings…

Q: A firm has the production function f(x,y)=x0.90.8. This firm has O constant returns to scale.…

A: The production function is:- f(x,y) = (x^0.9) * (y^0.8)

Q: In the short run, the firm's amount of capital equipment is fixed at k = 100. The rental rate for k…

A: As per Bartleby guidelines, providing solutions for first four parts.IntroductionCost and production…

Q: Suppose that a firm’s production function is q =L0.5K0.5. This means that the marginal rate of…

A: The production function shows the relationship between the factors of production to be used and the…

Q: Consider a production function of two inputs, labor and capital given by Q=LK. Let w =5 and r = 1,…

A: Production function refers to the function which shows the relationship between the final output and…

Q: A firm has the following production function: q = KL, where q is output, K is capital and L is…

A: A firm has production function: q = KL, The price of a unit of capital is $1,000 The price of a…

Q: 3.3 In the short run, a firm cannot vary its capital, R=2, but it can vary its labor, L. It produces…

A: The production function is the mathematical relationship between a firm's output and the inputs…

Q: Suppose a firm is producing 2,475 units of output by hiring 50 workers (W = $20 per hour) and 25…

A: The firm will maximise profit or minimise the cost at a point where price ratio of two inputs used…

Q: 25. Molly operates a factory with a production function given by Q(K, L.) = L+ 4K, where K is…

A: The production function of a firm shows the maximum amount of output a firm is able to produce by…

Q: Assume that production function of company is given with the following Cobb-Douglas production…

A: We have been given the following production function : Y=0.4*K0.8L0.2 MPK = ∆Y / ∆k =…

Q: 40 35 Output 30 25 20 15 10 5 1 2 3 4 5 6 Labor The diagram above shows the production function for…

A: Here, the production function bis a firm is represented graphically using which one can compute…

Q: A firm has the following short-run production function: Q = 50L+6L2 -0.5L3 where Q = Quantity of…

A: here we can find out the given things as follow

Q: True or false and explain Suppose a firm’s marginal product of labour is MPL = 10/L, where L is…

A: In the labor market of the economy, the equilibrium wage rate and the equilibrium quantity of labor…

Q: 1. You are given the following production function for a cost-minimizing firm: Q=500K o.5 the price…

A: We are going to use concepts such as Marginal rate of technical substitution to answer this…

Q: Suppose that firm's short-run 4 a production function is q=10/T – 1. 5.1 Find the level(s) of…

A: Given:

Q: A firm has the production function q = K0.25L0.25 , where K is capital, L is labor, and q is output.…

A: ***Since the third subpart of the question has not been mentioned clearly, so, the expert has solved…

Q: Suppose that a firm's production function is: 112- q = 10L0.5K0.5 98- Its marginal product functions…

A: Output has increased to 280 units, capital is 14 units. Therefore, q=10L0.5K0.5280=10L0.5(14)0.5…

Q: The following table describes the various least cost combinations of two inputs from various…

A: Iso quant shows the different possibil combinations of inputs that give same level of output . And…

Q: Suppose that the production function for Hannah and Sam's home remodeling business is Q…

A: The production function for Hannah is The production function for Sam is The wage rate is $8000 per…

Q: The production function of Amazon burgers, producers of delicious burgers is given as Q =6L -0.4L².…

A: The production function illustrates the relationship between the quantity of output produced to the…

Q: Question 18 Consider a firm that has production function f(L,K)=4L2/3K1/3. What is the expression…

A: The correct answer to the above-mentioned question is MPL(L, K)=8K1/3/3L1/3.

Q: Consider the "Cobb-Douglas" production function given by Y = AKL¹-a where A > 0 and 0 < a < 1. Which…

A: The Cobb-Douglas production function is a popular economic model used to represent the relationship…

Q: butput. What is the smallest integer price that would make a firm willing to produce a positive…

A: The link between the inputs and outputs is shown by the production function. In order to produce the…

Q: Question 4. Consider the production function y = L/2+√K where L is labor and K is capital. a) Is…

A: The production function is a mathematical relationship between the output produced and the inputs…

Q: In the short run, labor is a hat-making firm’s only variable input. Wage rate is $5.00/hour. The…

A: Marginal cost of a hat, is a cost of producing 1 more unit of hat.

Q: Describe the difference between a diminishing marginal product of labor and a negative marginal…

A: Law of diminishing marginal product is a short run concept where some factors are fixed and some are…

Q: Suppose Marcus produces chocolate with two inputs: factory and labour. The rent of the factory is…

A: Total cost refers to the cost of production of goods. It is calculated by the sum of fixed cost and…

Q: You are given the following short-run information for an individual firm. Labor (L) is the only…

A: Marginal product refers to the additional output obtained due to increasing one more unit of input.…

Q: Suppose a firm doubles its inputs in the long run and as a result, output doubles. Which of the…

A: Return to scale refers to the relationship between a change in inputs and the resulting change in…

Question

100%

A manager of a perfectly competitive firm observes the production
function Y = 100K ¹/³L 2/3. The firm currently hires labor = 20 units at
wage = $40 and capital = 5 units at rent = $60. To maximize profit,
manager should hire
labor and rent
capital.
less, less
less, more
more, less
more, more

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

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
handwritten of MPL, MPK, and MRTS
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
Consider a firm that produces a single output good Y with two input goods: labor (L) and capital (K). The firm has a technology described by the production function f : R? → R+ defined by f(1, k) = Vĩ + vk, where l is the quantity of labor and k is the quantity of capital. (a) In an appropriate diagram, illustrate the map of isoquants for the firm's production function. (b) Does the firm's technology satisfy the following properties: (i) strict monotonicity (i.e., are the marginal product of labor and the marginal product of capital strictly positive), (ii) the no-free-lunch property, (iii) constant/decreasing/increasing returns to scale? (iv) 1
Adam operates a small shop specializing in party favors. He owns the build- ing andsupplies all of his own labor and money capital. Adam incurs no explict rental or wagecost. Before starting his own bussines Adam earned $1,000 per month by renting outthe store and earned $2,500 per month as a store manger for a lrge departmentstore chain. Because Adam use his own money capital, he also sacrificed $1,000 permonth interest earned on U.S government treasury bonds. Adam’s monthly revenuesfrom operating his shop are $10,000 and his total monthly expense for labor andsupplies amounted to $6,000. Calculate Adam’s monthly accounting and economic profits
IV. Will can produce a higher grade, Gw, on an upcoming economic exam by studying. His production function depends on the number of hours he studies marginal analysis problems, A, and the number of hours he studies supply and demand problems, R. Specifically, Gw = 2.5A0.36R 0.64. His roommate David's grade production function is G) = 2.5A0.25R0.75 a. What is Will's marginal productivity from studying supply and demand problems? What is David's? b. What is Will's marginal rate of technical substitution between studying the two types of problems? What is David's?
urgent
True or false and explain Suppose a firm’s marginal product of labour is MPL = 10/L, where L is measured in labour hours, the price of the product is $600, and the cost per hour of labour is $30. The firm currently employs 150 labour hours. In order to maximize the firm’s profits in the short run, the manager should increase its labour employment by 40 labour hours.
Suppose we are given a production function: q [al® + (1 – a)kºj a. Please show that MP= (1 – a))P-1 and MP= al b. Please derive the RTS c. Please derive the elasticity of substitution o. d. Does this production function exhibit constant, increasing, or decreasing returns to scale?
Suppose that firm's short-run 4 a production function is q=10/T – 1. 5.1 Find the level(s) of maximise the firm's average product of L that labour (APL). 5.2 Calculate the value of the second- order derivative (SOD) at the value of L found in 5.1 that maximises APL 5.3 Calculate the marginal product of labour (MPL) at the level(s) of L that maximises APL
Con Co. produces a collectible card game. Currently, the price of capital is at $50 and the price of labor is at $10. The marginal product of capital is 200 and the marginal product of labor is 30. To minimize cost of the given output, Con Co. should Use more capital Use more capital and labor Leave capital and labor as is Use more labor
The short-run production function for a manufac- turer of wireless earbuds is shown in the table below. Based on this information, answer the fol- lowing questions. Input of Labor (workers per week) Total Output of Wireless Earbuds 1 25 2 60 3 85 4 105 115 6 120 a. Calculate the average product at each quantity of labor. b. Calculate the marginal product of labor at each quantity of labor. c. At what point does marginal product begin to diminish?