In the long run, a profit-maximizing firm will adjust its employment of capital and labor so thatThe marginal revenue product of labor equals its marginal expense.All of these answers are correct.The wage divided by the marginal product of labor equals the cost of capital divided by the marginal productof capital.None of these answers is correct.The marginal revenue product of capital equals its marginal expense.

All of these answers are correct

Answered: In the long run, a profit-maximizing…

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 18PAE

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Con 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
We often work with production technologies that give rise to initially increasing marginal product of labor that eventually decreases. Are the following statements then True or False? Explain.A negative marginal product of labor necessarily implies a downward sloping production frontier at that level of labor input.
Fill in the missing parts in the following tables to illustrate the behavior of production and costs in the short-run; then determine the optimal level of production according to the number of inputs you are intending to use. Output Units Land Square Meters Capital Egyptian Pounds Labor Units 0 1000 1600 2100 2500 2600 Output FC VC TC MCL MPL AVC AFC ATC 0 1000 1600 2100 2500 2600 -Hint Consider land and capital as fixed factors, while labor units as variable factors. The cost of land is L.E20 per square meter. The interest rate on capital is 10%. The average wages per unit of labor is L.E1500.
Suppose that the marginal product of labor for a local bakery is 120 units per day and the price of labor is $10 per day. Instructions: Enter your answers as a whole number. a. What does the least-cost rule say that the ratio of the marginal product of capital to the price of capital should be? Book b. Now suppose that the marginal product of labor is 120 units per day, the price of labor is $10 per day, and the price of capital is $3 per day. What does the least-cost rule say that the marginal product of capital should be? Print References
Suppose you are considering hiring another worker. Also assume that you are at a firm that is operating at a point where the marginal product of labor is 5 and the price of each unit of labor is $2, and the marginal product of capital is 20 and the price of each unit of capital is $10. Should you hire another worker? If you hire another worker, what will happen to the marginal product of labor and why?
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000. AP, MP 100 80 Average and marginal product of labor- 60 10 20 20 MP AP L 0 20 40 60 80 100 120 140 160 Labor When the firm uses 40 units of labor, what is marginal cost at this level of output? $70 ○ $35 ○ $60 $280
Suppose the productivity of capital and labor are as shown in the table below. The output of these resources sells in a purely competitive market for $1 per unit. Both capital and labor are hired under purely competitive conditions at $3 and $1, respectively. Units of MP of Units of MP of Capital Сapital Labor Labor 24 11 1 1 21 9 2 18 8 3 15 7 4 4 6 6. 3 1 7 7 1 0.5 8 CO LO Co CO
A firm's production function is: q = 20L1/2K1/2 where q is the firm's total product, L is the quantity of labor employed, and K is the quantity of capital employed. The price of labor is $25 per unit and the price of capital is $100 per unit. a. What is the equation for the marginal product of labor? b. What is the equation for the marginal product of capital? c. Given the price of labor is $25 per unit and the price of capital is $100 per unit, what is the cost-minimizing combination of capital and labor that can produce 800 units of output?
Let's explore the relationship between Marginal Product and Marginal Cost. Specifically, we have learned about Diminishing Marginal Product in the short run, when quantities of at least some inputs such as the facility and its capital are fixed. We also want to explore the connection between the downturn in Marginal Product and the eventual upturn in Marginal Cost, which is the additional cost from producing one additional unit of output. Look at the following table below linking quantity of output to quantity of labor units. From this table you can calculate Marginal Product, which is the change in total product as one more unit of labor is added in the short run when quantities of other inputs are assumed fixed. If we know how much each unit of labor costs, we can map output and marginal product into Variable Costs and Marginal Cost. For our purposes assume that labor is the only variable input in the short run and that each unit of labor costs $3. Using this information and the…
You are the owner of a puppet manufacturing company. Suppose that labour is the only variable input to 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 labour?
Output is produced according to Q = 4LK, where Lis the quantity of labor input and K is the quantity of capital input. If the price of K is $10 and the price of L is $5, then the cost-minimizing combination of K and L capable of producing 32 units of output is: L = 2 and K = 4. L = 4 and K = 2. L = 1 and K = 8. L = 8 and K = 1. L = 2 and K = 2.

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