Question 2 - ProductionThe following table summarizes the short-run production function for your firm. Your product sells for $5 perunit, labor costs $20 per unit, and the rental price of capital is $100 per unit. Complete the following table, andthen answer the accompanying questions.a. Fill out the table above and show work and formulas used.b. Which inputs are fixed inputs? Which are the variable inputs? Explain how you know.c. How much are your fixed costs?d. What is the variable cost of producing 20 units of output?e. How many units of the variable input should be used to maximize profits?f. Over what range of variable input usage do increasing marginal returns exist? Explain.g. Over what range of variable input usage do decreasing marginal returns exist? Explain.h. Over what range of variable input usage do negative marginal returns exist? Explain.Bonus: What are your maximum profits?QKL5 02010 530 5460 5 680 5890 5 1095 5 1295 5 1490 5 1680 5 1860 5 2030 5 22MP-L AP-L AP-K VMP-L

Question 2 Production The following table summarizes the short-run production function for your firm. Your product sells for $5 per unit, labor costs $20 per unit, and the rental price of capital is $100 per unit. Complete the following table, and then answer the accompanying questions. a. Fill out the table above and show work and formulas used. b. Which inputs are fixed inputs? Which are the variable inputs? Explain how you know. c. How much are your fixed costs?

Question 2 Production The following table summarizes the short-run production function for your firm. Your product sells for $5 per unit, labor costs $20 per unit, and the rental price of capital is $100 per unit. Complete the following table, and then answer the accompanying questions. a. Fill out the table above and show work and formulas used. b. Which inputs are fixed inputs? Which are the variable inputs? Explain how you know. c. How much are your fixed costs?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The feature that distinguishes short-run from the long-run is the*length of time it takes to produce 1 unit.existence of fixed costs.amount of variable resources used to produce 1 unit.the amount of profit the firm can expect to earn. The short-run is*less than a year.when a firm is unable to change some of its inputs.when a firm is unable to change output.when a firm is unable to change its price. The production function tells the firm*which input combination has the lowest total cost.which input combination produces a given output at the lowest possible cost.the maximum output that can be produced from a given amount of inputs.which output is the most profitable. In the short run*all costs are variable.all inputs are fixedthere may be fixed and variable inputs.all production decisions must be made on a daily basis. The law of diminishing marginal returns says that as units of labor are added to the production of an output when all other inputs are fixed, eventually*total product…
The figure shows the production function of a farmer who produces grain by working certain hours each day. Which of the following statements is correct about this production function? a. The slope of the production function represents the marginal rate of substitution. b. The ceteris paribus assumption means that the farmer becomes more productive as he works more hours. c. A rightward movement from B along the production function implies that the farmer has better technology. d. This production function exhibits economies of scale. e. A technological improvement would shift up the production function
2. Define marginal physical product of labor (MPP) and marginal cost of product (MC). How are these two related? Why is MC called the mirror image of MPP? Explain ( type answer and descripe with grph)
3. Production: a. State the decision rules used for finding the optimal amount of input(s) in both short-run and long-run production” b. Using your own words, explain the rationale behind each stated rule as if you were explaining them to someone who has not yet completed: c. The Demand for Labor is the visualization of what important short-run production concept, and what would shift this demand curve to the right? d. Use your answer above to explain why some worker (labor) earn much more than others, and why some workers are at a risk of losing their jobs to machines (capital). e. Explain why a Cobb-Douglas production function such as Q = LaKb s much more realistic than production functions such as Q = aL + bK
which of the following best describes marginal product?A.)Left over output- the loaves a bakery makes but does not sell that goes unused. B.) The total number of loaves a bakery can create with 5 workers and a fixed amount of capital. C.) The loaves made by a bakery using a substandard quality flour that ultimately harms business profits. D.) When the number of bakery staff increases from 2 to 3 bakers, 5 additional loaves are made.
Use the diagram below to answer the questions that follow. Capital (machine hours) 6 A 10 10 15 Labor (hours) Capital (machine houn) What do the diagrams above illustrate? 10 10 B Labor (hours) decreasing returns to scale and B constant returns to scale constant returns to scale and B increasing returns to scale increasing returns to scale and B constant returns to scale increasing returns to scale and B decreasing returns to scale
a.)Suppose that labor is the only variable input in the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal product of labor?b.)What are economies of scale? What are economies of scope? What is the difference between the two?
1. Suppose the production function is Q = 8L + 15K where Q is the quantity of output, L is the quantity of labor used in production, and K is the quantity of capital used in production. What can be said about this production function? It has Decreasing Returns to Scale It has Constant Returns to Scale It has Increasing Returns to Scale There isn’t enough information to determine the Returns to Scale for this production function 2. You’re dreaming of what to do during a nice summer day. You could mow the lawn which you would pay someone $15 to do for you. You could go for a walk which you value at $11. You could also take a nap and ignore everyone and everything else which you would pay $29 to do. If you to take a nap, what is your opportunity cost? Group of answer choices $29 $26 $15 $11
The law of diminishing marginal returns states: Select one: a. As a firm uses more of a variable factor of production, total product (TP) eventually decreases. b. As the size of a plant increases, marginal product (MP) eventually decreases. c. As a firm uses more of a variable factor of production, its average cost (AC) eventually decreases. d. As a firm uses more of a variable factor of production, with a given quantity of the fixed factor of production, the MP of the variable factor eventually decreases.
We can describe inputs as either fixed or variable. Thinking about a company that assembles cars, which of the following would be an example of a fixed input that could not be changed in the short run? Group of answer choices A)The robots that help assemble the cars. B)The building where the assembly takes place. C)The electricity required to support the assembly activity. D)The employees that work for the company.
3. Frisbees are produced according to the production function q = 2K+L where q = output of frisbees per hour, K =capital input per hour, L =labor input per hour. a) If K = 10, how much L is needed to produce 100 frisbees per hour? b) If K = 25, how much L is needed to produce 100 frisbees per hour? c) Graph the q = 100 isoquant. Indicate the points on that isoquant defined in part a and part b. What is the RTS along this isoquant? Explain why the RTS is the same at every point on the isoquant. d) Graph the q = 50 and q = 200 isoquants for this production function also. Describe the shape of the entire isoquant map. e) Suppose technical progress resulted in the production function for frisbees becoming q = 3K+ 1.5L. Answer part a through part d for this new production function and discuss how it compares to the previous case.