EconomicsPart 1O See HintA firm produces output (y) using two inputs, labor (L) and capital (K), according to the following Cobb-Douglas production function:y = f(L, K) = L0.25 K0.75Assuming that we draw the isoquant map with labor on the horizontal axis and capital on the vertical axis, what is the slope of this firm'sisoquant when L = 120 and K = 60? Give your answer to two decimal places and remember that the sign matters when describingthe slope of an isoquant.Part 2O See HintAssume that L = 120 and K = 60 and suppose that the firm decides to reduce its use of capital and replace those machine hours withsome additional labor hours. Approximately how many labor hours will the firm need to add for each machine hour it cut in order tomaintain the same level of output (i.e., stay on the same isoquant)? Give your answer to two decimal places. Ilabor hours

1. The isoquant will be, L0.25K0.75=c (1). Slope of this firm's isoquant is equal to dKdL at…

Part 1 A firm produces output (y) using two inputs, labor (L) and capital (K), according to the following Cob y = f(L, K) = L0.25 K0.75 Assuming that we draw the isoquant map with labor on the horizontal axis and capital on the vertical isoquant when L- 120 and K - 60? Give your answer to two decimal places and remember tbat t

Part 1 A firm produces output (y) using two inputs, labor (L) and capital (K), according to the following Cob y = f(L, K) = L0.25 K0.75 Assuming that we draw the isoquant map with labor on the horizontal axis and capital on the vertical isoquant when L- 120 and K - 60? Give your answer to two decimal places and remember tbat t

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 8P

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Question

Economics
Part 1
O See Hint
A firm produces output (y) using two inputs, labor (L) and capital (K), according to the following Cobb-Douglas production function:
y = f(L, K) = L0.25 K0.75
Assuming that we draw the isoquant map with labor on the horizontal axis and capital on the vertical axis, what is the slope of this firm's
isoquant when L = 120 and K = 60? Give your answer to two decimal places and remember that the sign matters when describing
the slope of an isoquant.
Part 2
O See Hint
Assume that L = 120 and K = 60 and suppose that the firm decides to reduce its use of capital and replace those machine hours with
some additional labor hours. Approximately how many labor hours will the firm need to add for each machine hour it cut in order to
maintain the same level of output (i.e., stay on the same isoquant)? Give your answer to two decimal places. I
labor hours

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Consider the following diagram showing a range of isoquants and isocosts, with labour measured on the horizontal axis and capital measured on the vertical axis. Assume that when the firm is producing in the short run, capital is fixed at K but capital is variable in the long run. K, Capital K A B Q3 Isoquant Q2 Isoquant Q₁ Isoquant L, Labour Which of the following can we conclude? O Only point B represents cost minimisation in both the short run and the long run, as it is on the short run expansion path, as well being the cost minimising point in the long run. Points A, B and C represent cost minimisation in the long run only. There are no points that represent cost minimisation in both the short run and the long run. Points A, B and C represent cost minimisation in both the short run and the long run. Points D and E represent cost minimisation in the short run only. Points A, B and C represent cost minimisation but only in the short run. Points D and E represent cost minimisation in…
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