Please complete the following statement. When isoquants are convex O a. the marginal rate of technical substitution rises as the quantity of labour increases. none of the other options. O b. O c. labor, but not capital, is subject to the law of diminishing marginal returns. d. the marginal rate of technical substitution falls as the quantity of labour increases. as labour increases and capital decreases, both the marginal product of capital and labour decrease. e.

Please complete the following statement. When isoquants are convex O a. the marginal rate of technical substitution rises as the quantity of labour increases. none of the other options. O b. O c. labor, but not capital, is subject to the law of diminishing marginal returns. d. the marginal rate of technical substitution falls as the quantity of labour increases. as labour increases and capital decreases, both the marginal product of capital and labour decrease. e.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Consider the production function given by Y= altbK. The prices of labor and capital are wLand wK, respectively. a. Find the conditional input demand for L and K b. Find the cost function C. How will an increase in wk affect the labor demand in a? Show graphically d. If K is fixed at 10, find the conditional labor demand
In the Cost Minimization Problem, the isoquant curve for an output level equal to the output quota? Illustrates the cost of labor and capital a firm pays to produce a level of output in excess of an output quota. Illustrates all combinations of labor and capital that a firm cannot afford. Illustrates all combinations of labor and capital that a firm can afford. O Illustrates all combinations of labor and capital that a firm can use to produce a level of output equal to the output quota.
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The elasticity of substitution of a Cobb-Douglas production function is constant alongthe whole range of any isoquant, and is equal to 1. Can you show this property that the elasticityof substitution is equal to one everywhere? Is the elasticity of substitution for a CES (ConstantElasticity of Substitution) production function the same?Kindly explain the answer to me.
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3. Theo employs labor at a competitive wage (W) of $3 per unit, and he employs capitalat a competitive rental rate (R) of $6 per unit.a. State the cost-minimizing rule. You must provide both a written statement of it, and state it as anequation.b. At Theo’s current combination of labor and capital, the marginal product of labor (MPL) is twiceas large as the marginal product of capital (MPK). Is Theo currently employing the optimal ratio oflabor and capital? If not, how should he adjust his hiring of labor and/or capital? Explain.
2. Capital A F E G B D Labor If the firm wants to produce the output level represented by the isoquant Qo, would you recommend production at point E or F or G? Please explain.