An isoquant represents O all inputs LK that produce a given q. all bundles LK that provide the firm with the same level of happiness. the amount of capital needed to make up for the loss of one laborer and continue to produce output a. O lager amounts of production it moves north east. O transitive, monotonic, and complete preferences of the firm.
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- The movement from point A to point B on the graph is caused by O a decrease in the price of the good. an increase in the price of the good. an advance in production technology. O a decrease in input prices. B P' P quaxtityAnswer the Constrained Optimization: Cobb-Douglas Production Function:1. Based from the factor shares of the two inputs, what will happen to the number of output ifit the firm decides to triple both the amount of labor and capital?2. State the optimization problem of the firm.3. Solve for the formulas of the Marginal Product of Labor (MPL), and Marginal product ofCapital (MPK)4. Using your knowledge of the tangency condition in Producer’s theory, find the combinationof K and L that the firm should use to produce the maximum possible output. Do not solvethe problem using the Lagrangian method.Note: The tangency conditions just states that the slope of the production function must beequal to the slope of the isocost function.5. What is the maximum possible output that the firm could earn given the constraint it faces?One of the following is not truc about the characteristics of well-behaved indifference curves: A. They are convex to the origin B. All points on an indifference curve vield the same level of satisfaction C. They are straight line D. As we move closer to the origin, the level of satisfaction will diminish E. None 5. When the short run average product of labor is declining but positive, the marginal product of labor is, C. Zero D. Any of the above is possible A. Negative B. Declining 6. When marginal utility is positive and declining, A. Total utility decreases at a diminishing rate B. Total utility increases at a diminishing rate C. Total utility increases at an increasing rate D. Total utility is negative 7. If the price elasticity of demand is less than 1 and price increases by 8%, then, quantity demand will, C. Increase by more than 8% A. Decrease by less than 8% D. Remains the same B. Decrease by more than 8% 8. refers to attitude of an individual who prefers risk income than…
- tangency point between an isoquant and an isocost line identines a: The least costly combination of inputs required to produce various levels of outputs. b.. The various levels of output that can be produced using a given level of inputs. C. "The various combinations of inputs that can be used to produce a given lever of output. The least costly combination of inputs(fequired to produce given level output.Prunella 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 aboveIsovalue lines are lines along which the utility is constant. O lines along which the value of input is constant. lines along which the value of output is constant. O lines along which the production cost is constant.
- 34. An iso-quant gives: Combinations of output that can be produced using different levels of inputs b. Combinations of inputs that can produce a constant level of ouiput C. Combination of out puts that can be produced with a given level of ituis d. None of the above is correctSuppose 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 4How firm choose optimum combination of inputs in short run and long run explain theoritically and graphically?
- If capital and labour are perfect complements then the marginal products of capital and labour are undefined A True Faise Question 16 A firm uses 10 units of labour and 20 units of capital to produce 10 units of output. The marginal product of labour is 0.5. If there are constant returns to scale the marginal product of labour must be 0.25 True B False Question 17 Afirm uses 10 units of labour and 30 units of capital to produce 10 units of output. The marginal product of labour is 05. If there are constant returns to scale the marginal product of labout must be 0.25 A True FalseConsider 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) 1Con 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