**Question 2:** The production function is given by $ Y = \min(2L, K) $. Assume that the firm has a fixed stock of capital of 20 units. The price of labor is $ \$w $ per worker and the price of output is $ \$p $ per unit.**b. Graph the production function**- The production function described is a Leontief or fixed proportion type, where output $ Y $ is determined by the lesser of two values: $ 2L $ (twice the labor employed) or $ K $ (capital). With $ K $ fixed at 20, the graph would show a line where $ Y = 2L $ up to the point where $ 2L = 20 $.**c. Find the labor demand. Show the two possible cases.**- **Case 1:** If $ 2L < K $, the output is limited by labor. Therefore, $ Y = 2L $.- **Case 2:** If $ 2L \geq K $, the output is limited by capital. Therefore, $ Y = K $. Since $ K $ is fixed at 20, the labor demand would ensure $ 2L = 20 $, leading to $ L = 10 $.**d. Assume the firm hires a positive amount of labor. How does $ L^* $ change if wages drop? Show graphically.**- When wages drop, the firm can afford to hire more labor for the same cost, which leads to an increase in the optimal labor demand $ L^* $ if it was not already constrained by capital. Graphically, this would show a rightward shift in the quantity of labor hired along the labor demand curve, up to the point where $ 2L $ approaches $ K $.

Answered: Image /qna-images/answer/5fb20c96-e9b1-4840-80e3-be8db2e5d12d.jpg

Question 2: The production function is given by Y-min(2L,K). Assume that the firm has a fixed stock of capital of 20 units. The price of labor is $w per worker and the price of output is $p per unit. b. Graph the production function C. Find the labor demand. Show the two possible cases. d. Assume the firm hires a positive amount of labor. How does L* change if wages drop? Show graphically.

Question 2: The production function is given by Y-min(2L,K). Assume that the firm has a fixed stock of capital of 20 units. The price of labor is $w per worker and the price of output is $p per unit. b. Graph the production function C. Find the labor demand. Show the two possible cases. d. Assume the firm hires a positive amount of labor. How does L* change if wages drop? Show graphically.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: The marginal product of capital MPK The marginal product of labor MPL Don't just give your answers…

A: MPL is the marginal product of labor. We can calculate MPL by finding partial derivative of Q wrt L.…

Q: A firm has the production function, Q=15L^1/3 K^2/3 where ? is output, ? is labour units and ? is…

A: The degree of homogeneity measures the relationship between change in inputs and change in output…

Q: 3. Capital (K) 44 60 45 Q= 1,000 60 Labor (L) 240 What is the Marginal Rate of Technical…

A: Identify the coordinates of point A:From the graph, point A has coordinates (Labor, Capital) = (60,…

Q: Consider the production function by Y = 10LK where L denotes number of workers and K denotes units…

A: Production function represents the functional relationship between the output and input.

Q: Consider a firm who owns capital K and has the following production technology Y = zF(K, N)= 2K³N³,…

A: A production function is a mathematical equation that expresses the relationship between the number…

Q: Question 7 The production function is f(x,x)=x¹²₁x¹2₂ a. In the short run the amount of factor 2…

A: Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: uppose that the production function is Yt = AtKt^(1/2) Lt^(1/2) where Yt is output, Kt is the stock…

A: Optimal input demand problem: The optimal input demand bundle is such that at that bundle the firm…

Q: Suppose that a firm has the following production function Q(K,L) = AKL² – BL³ where K represents…

A: We are going to answer the question by calculating marginal product of labor using differentiation…

Q: Q1. There are two production functions given as 1. q = l // k/² | 2. q = min(1, ½ k) a. Suppose k…

A: Production function is the mathematical expression that signifies the relationship between inputs…

Q: please help

A: Profit maximization requires price of inputs to be equal to value of Marginal product of inputsP *…

Q: Consider an economy whose real marginal product of labor MPN is as follows: MPN = A(1000 – 0.2N)…

A: MPN = A (1000 - 0.2N) -------------> Marginal product of labor NS =500 + 5 (1-t)w…

Q: 8 Suppose that a firm with ordinary-shaped isoquants and that wants to produce a certain level of…

A: The equilibrium is given by the point : MPn/Pn=MPK/PK or MPn / MPk = Pn / Pk

Q: Labor (L) 0 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Output (Y) 0 10 19 27 34 40 45 49 52 54 59 MPL n.a ? ? ?…

A: When a corporation adds a single labour unit while maintaining the same level of production, the…

Q: □ A firm hires two people and output increases by 20 units. The firm adds one more person and output…

A: Marginal value is the value derived from the additional unit of variable. Marginal product of labor…

Q: Consider the following production function: q=100L0.80.4 Currently the wage rate (w) is $20.00 and…

A: The production function is the mathematical relationship between different bundles of inputs and the…

Q: Joe owns a small coffee shop. His production function is q = 2K0.5 L where q is the number of cups…

A: Answer - Given in the question- Joe owns a small coffee shop. His production function is q = 2K0.5 L…

Q: Question 2: Consider the production function given by Y = min(L,5K). The firm has a fixed amount of…

A: The production function represents the relationship between the output and inputs. The function is…

Q: 4. A firm has a linear production function Q = 16L + 8K. The price of labor, w, is $6 per unit and…

A: Finding the Optimal Input CombinationWe're given a linear production function, input prices, and a…

Q: Assume the production function of a farmer who keeps a poultry is q=f(L) = 100L05, where Lis labor…

A: Production function: L denotes the number of labor employed in the firm.The wage for labor is 2 per…

Q: please help

A: Marginal Product:Marginal product refers to the change in output due to the change in inputs.…

Q: 1. Suppose a short-run production function is described as Q = 40L 0.04L2 where L is the number of…

A: Marginal Product of Labor(MPL): refers to the change in output (quantity produced) resulting from…

Q: A plant's production function is Q = 2KL. For this production function, MPx = 2L and MPL = 2K. The…

A: Given production function Q=2KL MPk=2L MPl=2K W=4 r=6

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The fast food company Schnabb uses labor and capital to produce its product. Holding the production fixed, what is the effect of a lower price of capital on the ratio between the number of workers and the amount of capital used? Explain using isocosts and an isoquant.
The slope of isocost AB is Units of capital C 80 60 A 0 B D 60 80 Units of labor greater than the slope of isocost CD. less than the slope of isocost CD. equal to the slope of isocost CD. indeterminate from this information, as the prices of capital and labor are not given. E 120
B. Suppose that your production process is characterized by the production function x = f(e) = 100 In ( + 1). For purposes of this problem, assume w > 1 and p > 0.01. a. Set up your profit-maximization problem. b. Derive the labor demand function. C. The labor demand curve is the inverse of the labor demand function with p held fixed. Can you demonstrate what happens to this labor demand curve when p changes? d. Derive the output supply function. e. The supply curve is the inverse of the supply function with w held fixed. What happens to this supply curve as w changes? (Hint: Recall that In x = y implies e' = x, where e ≈ 2.7183 is the base of the natural log.) f. Suppose p = 2 and w profit will you make? = 10. What is your profit-maximizing production plan, and how much
Q9 please help fast! All info is there Suppose that the firm has production function F(L,M) = 4L1/2M1/2 (where L is the number of workers and M is that of machines) and currently uses 16 machines. To produce 32 units of output, how many workers does the firm need to hire?
Say that a lumber firm is producing output (Q) in the form of trees. They hire lumberjacks (L), but have a fixed level of capital. There are no other inputs. Select the values that correctly fill in the table. L = number of lumberjacks Q = number of trees MPL = marginal product of labor 0 0 -- 1 4 2 10 3 12 4 13 5 13
onsider a producer with budget C = 200 who can buy labor L at a wage w = 10 and capital K at a price r = 5. The producer has the following production function F(K,L) = 3K1/3 L2/3 . a. Does F(K,L) exhibit increasing, decreasing, or constant returns to scale? Show your work. Consider a new production function F(K,L) = K1/3 L2/3 , where is a? ? positive constant not equal to 3. Does the new production function exhibit increasing, decreasing, or constant returns to scale? b. Using F(K,L) = 3K1/3 L2/3, find the optimal bundle. Show your optimal bundle on a plot (this should include isoquant and isocost curves). c. Suppose the budget is reduced to C = 100 and then C = 50. Find the new optimal bundles. Plot these bundles, along with the initial optimal bundle, on one plot. Draw the expansion path PLEASE SHOW GRAPHS do not use chat gpt
The following picture represents a production function after an increase in total factor productivity z. What marginal happens to the product of labor? Y=zF(K,N) Labor (N) O It increases O It decreases O It increases from some levels of labor, it decreases for some others O Not enough information