Answered: K 9c (q-700) 9ь (-600) 9a (q=500) C.…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.6P

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Question

A firm is currently producing 500 units of output daily by employing 60 units of labor daily at a price of $10 per unit and 30 units of capital daily at a price of $20 per unit. The marginal product of the last unit of labor employed is 3, and the last unit of capital employed is 5.

a. Given the above information, what does the firm's marginal rate of technical substitution, MRTS_L,K, equal?

b. Indicate on the following diagram some point labeled A that is consistent with the information given in the question.

K
9c (q-700)
9ь (-600)
9a (q=500)
C. (TC-$1,200)

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