Capital=K2620Bslope=-MP/MPkXB=180XA =120slope-w/r1013 labora) If w=5 and r=6, show the equation for the isocost that goes throughpoint A and point B.b) Using the information from the graph above plus point (a) pleaseproduce a graph with total cost on the y-axis and output on the x-axisc) Using the information from the graph determine if the productionfunction has increasing, constant, or decreasing returns to scale. Showall your calculations.d) Why are points A and B economically efficient?

Part (a)Given:Wage rate, w=5Rental rate of capital, r=6The isocost line equation is given by:…

Answered: Capital=K 26 20 B slope=-MP/MPk XB =180…

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

Given the following production function: q = 10KL. Assume that w = 25, r = 75 and C = 1200. (a) Mathematically find the minimum cost combination of capital and labour to produce a given level of output.b) Does the production function in part (a) show increasing returns to scale, decreasing returns to scale, or constant returns to scale? Explain. (c) Using isoquants and isocosts, graphically illustrate the effect of an increase in the wage rate, assuming the firm is producing at the same level of output.
The following is a production function. 50,000- 45,000- 40,000- Draw a graph of marginal product as a function of labor. 35,000- 30,000- 25,000- Total output (Q) 20,000- 15,000- 10,000 ng 5,000- 0+ 0 200 100 300 Units of labor (L) 400 L Q 1.) Using the line drawing tool, graph the marginal product curve from 0 to 100 units of labor. Label this line 'MP Segment 1" 2.) Using the line drawing tool, graph the marginal product curve from 100 to 300 units of labor. Label this line 'MPS Note: Carefully follow the instructions above and only draw the required objects. Does this graph exhibit diminishing returns? Explain your answer. ○ A. Yes, it does exhibit diminishing returns, because the marginal product of labor decreases. B. No, it does not exhibit diminishing returns, because the marginal product of labor is zero. ○ C. No, it does not exhibit diminishing returns, because the marginal product of labor is increasing. ○ D. Yes, it does exhibit diminishing returns, because the marginal…
Refer to the graph below: y2 The graph above illustrates a production set of a firm. (a) Which assumption(s) do(es) the production set violates? Explain. (b) Suppose the firm decided to scale all inputs up or down by some amount t > 0. What will happen to the level of output?
Cheburashka uses kiwi fruits (K) and labour (L) to produce juice (q). His production function is: q=min{L/3, K0.5}, where labour is measured in hours, kiwi fruits in kg, and juice in (large) bottles. For example, if he uses 4 kg of kiwi fruits and 6 hours of labour, he can produce 2 bottles of juice. a) Draw isoquants for q = 1, q = 2 and q = 3 on a graph with labour on the horizontal axis and kiwi fruits on the vertical one. = $5 per kg. b) Let the price of labour-hour be given by w = $18 and the price of fruit by p What is the optimal amount of labour and fruit to produce q bottles of juice if Cheburashka strives to minimise costs? (Note that you need to provide expressions L(q) and K(q)). Illustrate on the graph from a) by drawing corresponding isocost lines. c) Draw the Cheburashka's expansion path on a graph from a). Derive an expression for the expansion path, i.e., K as a function of L. How does it depend on the wage and the price of kiwi?
When Marginal Product of Labor intersects the Average product of labor, minimum average product of labor obtains at the intersection. True False
can you please provide explanations and working
***PLEASE NOTE - An answer is NOT needed for parts A, B and C; these are included to assist with answering part D. Only an answer for part D is required, but it is derived from the previous answers*** Given: A farmer raises peaches using land (K) and labor (L), and has an output of ?(?,?)= ?0.5?0.5 bushels of apples. a. Find several input combinations that give the farmer 6 bushels of apples. Sketch the associated isoquant on a graph, with L on the x-axis and K on the y-axis. b. In the short run, the farmer only has 4 units of land. What is his short-run production function? Graph it for values of L from 0 to 16, with L on the x-axis and output on the y-axis. What is the name of the slope of this curve? c. Assuming the farmer still only has 4 units of land, how much extra output does he get from adding 1 extra unit of labor if he is already using only 1 unit of labor? How much extra output does he get from adding 1 extra unit of labor if he is already using 4 units of labor?…
Isoquant curves The Firm can trade two doctors for five gardeners and output remains constant What is the shape is the isoquant curve for the firm? (doctors on x axis) Find slope of curve at: (20,15) (5,25) (5,15)
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?

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS