QUESTION 21 Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Units of capital 80 60 A BD E 60 80 120 Units of labor Figure 7.8 Refer to Figure 7.8. The slope of isocost CD is O greater than the slope of isocost AB. less than the slope of isocost AB. equal to the slope of isocost AB. indeterminate from this information, as the prices of capital and labor are not given.

QUESTION 21 Refer to the information provided in Figure 7.8 below to answer the question(s) that follow. Units of capital 80 60 A BD E 60 80 120 Units of labor Figure 7.8 Refer to Figure 7.8. The slope of isocost CD is O greater than the slope of isocost AB. less than the slope of isocost AB. equal to the slope of isocost AB. indeterminate from this information, as the prices of capital and labor are not given.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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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, MRTSL,K, equal? b. Indicate on the following diagram some point labeled A that is consistent with the information given in the question.
Bicycles 120 14 8 6 4 2 A B D 0 2 4 6 8 10 Computers Refer to the diagram. If society is currently producing 14 units of bicycles and 0 units of computers and it now decides to increase computer output to 4, the cost Multiple Choice will be 5 units of bicycles. will be 4 units of bicycles. will be zero because unemployed resources are available. of doing so cannot be determined from the information given.
Initially a firm's wage is w= $24 and its rental cost of capital is r $24. After its wage rate doubles, how do its isocost lines change? Let L represent labor and K capital. 1.) Using the line drawing tool, graph an isocost line at the original wage, when the wage is w = $24. Label this line 11: 2.) Using the line drawing tool, graph an isocost line at the new wage, when the wage doubles. Label this line '12. Carefully follow the instructions above, and only draw the required objects. 20- 18- 16- 14- 12- 10- 8- 6- 4- 2- K, Capital 0 2 4 6 8 10 12 14 16 18 L, Labor
Suppose that this conveyor-manufacturing firm has another location and would like you to evaluate the input mix decisions at this new location. Here is all you know about the newlocation. The marginal rate of technical substitution is currently 0.5. The marginal product of labor at its target level of output is 60 rollers per hour. What is the marginal product of capital? Ifthe rental rate for capital is $24 per hours at this location and the wage paid to labor is $12 per hour, could this location be minimizing the costs of producing its target level of output? Explain briefly.
From the following production functions 1. Q= a1H + a2L + a3H2 + a4 L2 + a5HL, where ai> 0 2. Q = aH@ Ly, where a, @, y > 0 a. Derive the equation of the relevant isoquant. b. Find out whether the production function is well behaved. c. Examine whether the isoquant is well behaved and therefore represents the behaviour of a rational production. d. Derive equation which describes MRTS of 9ne factor. e. For each equation examine whether the production is homogeneous and if so, what is the degree of homogeneity. Is the equation characterized by IRTS, DRTS or CRTS.
Wage Rate D₁ D₂ Quantity of Labor Refer to the above graph. What will shift D₁ to D₂? O An increase in the price of a substitute input (if the output effect is greater than the substitution effect) O A decrease in the price of a substitute input (if the substitution effect is greater than the output effect) O A decrease in the price of a substitute input (if the output effect is greater than the substitution effect) An increase in the price of a complementary resource
) Suppose there are two inputs in the production function-labor and capitaland that these two inputs are perfect substitutes. Suppose that the price of capital is 750 GHC per machine per week and that the weekly salary of each . worker is 300 GHC . i) Draw the isocost line ii) With the aid of a graph, explain the effect of a wage decrease on flrm-level employment and output holding initial cost ouday constant.
The Cobb-Douglas production function is a classic model from economics used to model output as a function of capital and labor. It has the form f(L, C)=²1C²2 where co. ₁, and care constants. The variable L represents the units of input of labor and the variable C represents the units of input of capital. (a) In this example, assume co5, c, 0.25, and c₂-0.75. Assume sach unit of labor costs $25 and each unit of capital costs $75. With $70,000 available in the budget, devalop an optimization model for determining how the budgeted amount should be allocated between capital and labor in order to maximize output. Max s.t. L, CZO € 70,000 (b) Find the optimal solution to the model you formulated in part (a). What is the optimal solution value (in units)? (Hint: When using Excel Solver, use the bounds 0S LS 3,000 and 0 s Cs 1,000. Round your answers to the nearest integer when necessary.) units at (L. C)=(
Consider the following production function: q = 9LK + 6L² – Assuming capital is measured on the vertical axis and labor is measured on the horizontal axis, determine the value of the marginal rate of technical substitution when K= 30 and L= 10. MRTS = -. (Enter a numeric response using a real number rounded to two decimal places.) 20 tv MacBook Air F6 FB 10 F3 23 2$ & з 4 6 7 8 { [ E Y U P D F G J K > C V N M command option - .. .- B
2. Consider a Cobb-Douglas production function with three inputs. K is capital (the number of machines), L is labor (the number of workers), and H is human capital (the number of college degrees among the workers). The production function Y = K2/6 L3/6 H1/6 a) Derive an expression for the marginal product of labor. How does an increase in the amount of human capital affect the marginal product of labor? (Hint: The marginal product of labor MPL is found by differentiating the production function (Y) with respect to labor (L)) b) Derive an expression for the marginal product of capital. How does an increase in the amount of human capital affect the marginal product of capital? (Hint: The marginal product of capital MPK is found by differentiating the production function (Y) with respect to capital (K)).
Cowles Foundationfor Research in Economicsat Yale UniversityCowles Foundation Discussion Paper No. 2021ARE WE APPROACHING AN ECONOMIC SINGULARITY?INFORMATION TECHNOLOGY AND THE FUTUREOF ECONOMIC GROWTHWilliam D. NordhausSeptember 2015An author index to the working papers in theCowles Foundation Discussion Paper Series is located at:http://cowles.yale.edu/This paper can be downloaded without charge from theSocial Science Research Network Electronic Paper Collection:http://ssrn.com/abstract=2658259Electronic copy available at: http://ssrn.com/abstract=2658259Are We Approaching an Economic Singularity?Information Technology and the Future of Economic GrowthWilliam D. Nordhaus1September 1, 2015AbstractWhat are the prospects for long-run economic growth? The presentstudy looks at a recently launched hypothesis, which I label Singularity.The idea here is that rapid growth in computation and artificialintelligence will cross some boundary or Singularity after whicheconomic growth will…
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.