"Industry organization Agri SA has expressed concern about rising input costs in the agricultural sector, echoing concerns raised by the Agricultural Business Chamber (Agbiz) earlier this week. Agri SA says the cost of direct materials, labour and other overheads are particularly worrying, while Agbiz mentioned how fuel costs are gnawing at agribusiness' profitability". Sunshine markets is producing and selling sweet potatoes and they have been impacted by the rising costs. a) A B (A) c) C d) D (C) S1 D'a (B) (D) If sweet potatoes and potatoes are substitute products, which diagram above illustrates the effect on the sweet potato market of a decrease in the price of potatoes? D'a

"Industry organization Agri SA has expressed concern about rising input costs in the agricultural sector, echoing concerns raised by the Agricultural Business Chamber (Agbiz) earlier this week. Agri SA says the cost of direct materials, labour and other overheads are particularly worrying, while Agbiz mentioned how fuel costs are gnawing at agribusiness' profitability". Sunshine markets is producing and selling sweet potatoes and they have been impacted by the rising costs. a) A B (A) c) C d) D (C) S1 D'a (B) (D) If sweet potatoes and potatoes are substitute products, which diagram above illustrates the effect on the sweet potato market of a decrease in the price of potatoes? D'a

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. A firm's marginal product of labor is 20 and its marginal product of capital is 24. The wage rate is 5 and the rental rate of capital is 4. Is the firm minimizing its long-run cost of production? If yes, explain intuitively why this is the best choice. If not, explain why not and suggest how the firm should alter its production. For full credit, your answer must do more than state a rule; you must explain why the rule makes senSe.
Milk is flowing like never before in the U.S., where dairies have expanded output enough to send wholesale prices plunging from an all-time high in September. Production in the 12 months through October reached 17.08 billion pounds a month on average, up 1.8 percent from the same period a year earlier, as farmers took advantage of high milk prices and low livestock-feed costs, government data show. Two years of record corn harvests in the U.S. sent grain prices to a five-year low. Grains are mainly used as feed for cow farmers. Imports of milk to the US has also increased during the period as countries such as New Zealand are also benefiting from good market conditions During this time however, demand for the good has not been able to keep up with the supply. Notably, the current market conditions are not expected to last with impending drought conditions that would impact the harvest of corn and result in an increase in its price. With higher prices for grains some farmers may no…
3. (14 points) Let the production function be Q(K,L)=2K L. The cost of one unit of labor is w, the cost of one unit of capital is r, and the quanitity to produce is y. (a) (4 points) Set up the firm's cost-minimization problem, and clearly write down the con- Page 6 straint the firm faces. The cost minimization problem of the firm is min(KL) WL+rK. The constraint: y=2K!L!. anscribed Text (b) (5 points) What are two conditions that the optimal bundle L and K need to satisfy? Write down their expressions. Tangency: -=-; production: y = 2(K)! (L)!. (c) (5 points) Solve for the optimal bundle of L. and K that minimizes the firm's cost at y=144 by finding L and K", assuming that w $16 and r $81. By solving the system of two conditions in Part (b), it should be not that hard to get L = 162 and K* = 32.
P1
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. Rise in costs is a bad thing If rising costs are due to rising prices If rising costs are due to rising demand It is bad anyway None
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