Answer the question based on the following information: Suppose 30 units of product A can be produced by empl labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3, respectively. Production Techniques I II 4 3 2 3 III 2 5 IV 5 1 Labor Capital If the price of product A is $1.00, and the firm is producing efficiently the firm will realize

Answer the question based on the following information: Suppose 30 units of product A can be produced by empl labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3, respectively. Production Techniques I II 4 3 2 3 III 2 5 IV 5 1 Labor Capital If the price of product A is $1.00, and the firm is producing efficiently the firm will realize

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 6 ▼ Suppose a Cobb-Douglas Production function is given by the following: P(L, K) = 10L0.9 K0.1 where L is units of labor, K is units of capital, and P(L, K) is total units that can be produced with this labor/capital combination. Suppose each unit of labor costs $100 and each unit of capital costs $700. Further suppose a total of $140,000 is available to be invested in labor and capital (combined). Units of labor, L = A) How many units of labor and capital should be "purchased" to maximize production subject to your budgetary constraint? Submit Question Units of capital, K = B) What is the maximum number of units of production under the given budgetary conditions? (Round your answer to the nearest whole unit.) Max production = Question Help: Video units
Answer each of the following questions as either true or false. For a statement to be “true,” it must always be true. If there is at least one case where the statement is not true (or if you need more information to be sure), answer “false.” You must justify each answer with an appropriate explanation or counterexample (which may include a relevant diagram). A firm can make widgets using capital and labor according to the production function f(K,L) = 100L + 0.5K. Denote the wage w and the rental rate on capital r. If r is sufficiently high, the firm will not hire any capital, no matter how many widgets it wants to produce.
Question 5: Suppose a brewery uses a Cobb-Douglas production function for his production. He studies the production process and finds the following. An additional machine-hour of fermentation capacity would increase output by 500 bottles per day (i.e. MPK = 500). An additional man-hour of labor would increase output by 1000 bottles per day (i.e. MPL = 1000). The price of a man-hour of labor is $50 per hour. The price of a machine-hour of fermentation capacity is $5 per hour. 2. It turns out, the brewery is not optimally chossing the factors of production. To lower its production cost, which factor of production should the brewery increase and which factor should he decrease?
Suppose that widgets can be produced using two different production techniques, A and B. The following table provides the total input requirements for each of five different total output levels. Q = 1 Tech. K L A B Q=2 K L 2 4 1 6 1 3 2 5 Total Cost L K Assuming that the price of labor (P₁) is $1 and the price of capital (PK) is $3, calculate the total cost of production for each of the five levels of output using the optimal (least-cost) technology at each level. Q=3 K L 4 9 4 8 To do this, complete the table below by calculating the total cost of production, filling in the missing values using the optimal (least-cost) technology at each level. (Enter your responses as whole numbers.) Q=4 K L 12 5 Total Cost How many labor hours (units of labor) would be employed at each level of output? How many machine hours (units of capital)? To answer this, complete the table below for the units of labor and units of capital that would be used to produce each level of output. (Enter your…
The following table shows the capital and labor requirements for 10 different levels of production. Assuming that the price of labor (PL) is $9 per unit and the price of capital (PK) is $8 per unit, compute and graph total cost, marginal cost, and average cost for the firm. To do this, fill in the total cost for each output level in the table below. (Enter your responses as whole numbers.) q 0 1 2 3 4 5 6 7 8 9 10 K 0 20 20 20 20 20 20 20 20 20 20 L 0 3 7 10 13 17 23 31 41 53 67 TC 0
Suppose that widgets can be produced using two different production techniques, A and B. The following table provides the total input requirements for each of five different total output levels. Q = 1 Tech. K L A 4 1 B 1 3 Total Cost Q = 2 K L 2 5 6 2 Q=1 $6 L K Q = 3 Assuming that the price of labor (PL) is $2 and the price of capital (PK) is $1, calculate the total cost of production for each of the five levels of output using the optimal (least-cost) technology at each level. K 9 4 Q = 4 L K L 4 12 7 11 8 8 5 12 7 15 To do this, complete the table below by calculating the total cost of production, filling in the missing values using the optimal (least-cost) technology at each level. (Enter your responses as whole numbers.) Q = 5 $27 Q=2 $ 10 Q = 5 K L Q = 3 $ 17 Q = 4 $ 26 How many labor hours (units of labor) would be employed at each level of output? How many machine hours (units of capital)? To answer this, complete the table below for the units of labor and units of capital that…
Suppose the production function is given by Q = 5K+2L. What is the marginal product of capital when 5 units of capital and 10 units of labor are employed?
Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the Cobb-Douglas production function Q=F(L,K) Q=10L^0.25 K^0.25 where L is their number of workers and K is units of capital. The wage rate is $500 per week and a unit of capital costs $500 per week. Suppose that when initially producing 10 square feet a week, they use 1 unit of capital.a. What is their short-run cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ b. What is their short-run average cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ c. What is their long-run cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ d. What is their long-run average cost of remodeling 80 square feet per week? Instructions: Round your answer…
answer question d Q5. Jason is running a cleaning business, there are available labours (L) and machines (M) for Jason to use as inputs to produce cleaning service for his clients. a) Suppose Jason must use both labours and machines without any specific ratio to complete the service for his clients, please write down the general production function formula for Jason. hint: you could use any letter if you want] b) Under the function form of a), assume Jason's Marginal Rate of Technical Substitution (MRTSL, M) equals to 2, how do you interpret it? c) Assume Jason now can use only single input, either labour or machine to complete the service, please write down the general production function formula for Jason. hint: you could use any letter if you want] d) Under the function form of c), assume Jason's Marginal Rate of Technical Substitution (MRTSL, M) is always larger than the market price ratio between labour and machine (w/r), what should Jason do? why?
QUESTION THREE: PRODUCER THEORY 1. Suppose the production function for automobiles is given by q = kl - 0.8k² - 0.21² where q represents the annual quantity of bicycles produced, k represents annual capital input, and I represents annual labor input. a) Suppose k=10; graph the total and average productivity of labor curves. At what level of labor input does this average productivity reach a maximum? How many cars are produced at that point? b) Again, assuming k=10, graph the MP curve. At what level of labor input does MP₁ = 0 c) Suppose capital inputs were increased to k-20. How would your answer to parts (a) and (b) change? d) Does the production of automobiles exhibit constant, increasing, or decreasing returns to scale? 2. Supposing that the firm in (1) is a competitive firm and its production function is y = 10 + (x - 1,000)¹/3. The price of the input x is w = 1. (a) Show that the firm's total cost curve is C(y) = 1,000 + (-10)³. (b) Show that the minimum of the marginal cost curve…
Q)solve it correctly The marginal products of capital (MPK) and labor (MPL) are, respectively, MPK = 2000 units; MPL = 1500 units. The input prices are: PK = $10/unit; and PL = $150/unit. To minimize production costs, the firm should A. increase both capital and labor B. decrease both capital and labor C. increase capital; decrease labor D. decrease capital; increase labor E. do nothing; costs are minimized
A small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital If hiring labor for the winter costs $100/unit and a unit of capital costs $400, what is the best production method? What method should the company use if the cost of labor rises to $200/unit?