CONCEPTUAL AND COMPUTATIONAL QUESTIONS1. A firm's analysts estimate that the firm can manufacture a product according to the pro-duction function (LO1, LO2, LO5, L06)m" pro-union'sng run,an in-ovideswon incostlystly ar-ementng-runQ = F(K, L) = K³41/4a. Calculate the average product of labor, APL, when the level of capital is fixed at81 units and the firm uses 16 units of labor. How does the average product of laborchange when the firm uses 256 units of labor?b. Find an expression for the marginal product of labor. MP, when the amount ofcapital is fixed at 81 units. Then, illustrate that the marginal product of labor dependson the amount of labor hired by calculating the marginal product of labor for 16 and81 units of labor.c. Suppose capital is fixed at 81 units. If the firm can sell its output at a price of $200per unit of output and can hire labor at $50 per unit of labor, how many units of laborshould the firm hire in order to maximize profits?McGrawHillC

We have the following production function: Q = K3/4L1/4 Where Q is quantity produced K is capital L…

Calculate the average product of labor, APL, when the level of capital is fixed a 81 units and the firm uses 16 units of labor. How does the average product of 1- change when the firm uses 256 units of labor? Find an expression for the marginal product of labor, MP, when the amount o fived at 81 units. Then, illustrate th inal product of labor d 1:

Calculate the average product of labor, APL, when the level of capital is fixed a 81 units and the firm uses 16 units of labor. How does the average product of 1- change when the firm uses 256 units of labor? Find an expression for the marginal product of labor, MP, when the amount o fived at 81 units. Then, illustrate th inal product of labor d 1:

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.12P

See similar textbooks

Similar questions

Suppose a firm faces the following average and marginal products of labor: APL=50+2L-0.05L² MPL 50+4L-0.15L² At what value of labor does Stage III of production begin? O a. 13.3 Ob. 35.9 OC. 0.0 d. 20.0 O e. 57.4
8 If the Marginal Rate Technical substitution (MRTS) of labor (L) for capital (K) equal * (0.5), then the MPK/MPL is 4 O 2 0 1 0 0.5 O
In the Cobb-Douglas production function (Q - aL³¹K²): O a. a and b b. the marginal product of labor (L) is equal to 1 O c. a and c d. if the amount of labor input (L) is increased by 1 percent, the output will incre e. the average product of labor (L) is equal to 32
Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. Units of Labor Total ProductMarginal ProductTotal Revenue 0 1 AWNF 2 3 4 567 0 14 30 35 39 44 14 10 2 $ 112 240 312 336 352 If the wage rate is $40 and Manfred's only fixed input is capital, the total cost of which is $35, then what will be his economic profit? Multiple Choice 120 112 85 56
According to the Wall Street Journal, Mitsubishi Motors recently announced a major restructuringplan in an attempt to reverse declining global sales. Suppose that as part of the restructuring planMitsubishi conducts an analysis of how labour and capital are used in its production process. Priorto restructuring Mitsubishi’s marginal rate of technical substitution is 0.15 ( in absolute value). Tohire workers. Suppose that Mitsubishi must pay the competitive hourly wage of US$ 15. In thestudy of production process and markets where capital is procured, suppose that Mitsubishidetermine that its marginal productivity of capital is 0.5 small cars per hour at its new targetedlevel of output and that capital is procured in a highly competitive market. The same studyindicates that the average selling price of Mitsubishi’s smallest car is US$ 9500. Determine therate at which Mitsubishi can rent capital and marginal productivity of labour at its new targetedlevel of output. To minimize costs…
Suppose the hourly wage is $10 and the price of each unit of capital is $25. The price of output is constant at $50 per unit. The production function isf(E, K) = E 1/2K 1/2so that the marginal product of labor isMPE = (1/2)(K/E) 1/2If the current capital stock is fixed at 1,600 units, how much labor should the firm employ in the short run? How much profit will the firm earn?
Suppose an auto manufacturer has one factoryin the United States and one in Mexico. The automanufacturer produces the same number of carsand the same models in each factory but hiresmore workers in Mexico than in the United States.Give an explanation for the discrepancy in theamount of labor hired in each location
capital (k) per period 145 O 362 453 O272 O 145 272 453 labor (1) per period 12 Please refer to the graph above. Assume 11, 12, and i3 are all isoquants. What is labor if inputs are used in fixed proportions?
Check my wor Units of Labor Total Output per Price of Good Day 10 $14 14 13 4 19 12 23 11 27 10 es 7 31 A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. What is the marginal revenue product of the sixth worker? Multiple Choice $10 $60 $4 $17
Zwro Suppose the long-run cost function is given by: C(w.r. Q) = (w+r) What would be the conditional demand for labor and capital respectively? O 2r?Q 2r2Q 2w2Q (w+r)3' (w+r)³ 2rQ 2wQ (w+r)²' (w+r)? (w+r)? (w+r)? 212Q 2w2Q (w+r)2' (w+r)?
Recently, the Boeing Commercial Airline Group (BCAG) recorded orders for more than15,000 jetliners and delivered more than 13,000 airplanes. To maintain its outputvolume, this Boeing division combined efforts of capital and more than 90,000 workers.Suppose the European company Airbus enjoys a similar production technology andproduces a similar number of aircraft but that labor costs (including fringe benefits) arehigher in Europe than in the United States.o Please explain whether workers at Airbus have the same marginal product asworkers at Boeing?
When the marginal product of an additional worker is less than the marginal product of the previous worker, there are O A) increasing marginal returns to labor O B) decreasing marginal returns to labor C) decreasing total returns to labor D) increasing total returns to labor