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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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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