Question Labour is a variable input into the production process. In this sense, a change the amount of labour used in production (the number of employee hours) lead to proportionate change in labour costs. However, some other labour-related costs may als Occur. a) Define "quasi-fixed costs" and give three examples of them. b) Assume a t-period of setting. Write down the mathematical expression that describes the profit-maximizing employment rule of a firm when there exist quasi-fixed costs. Explain what this expression means. c) Consider a firm that only exists for one period. The value of labour's (L) marginal product is given by VMPL = P × MP₁, where P is the price of output, and MPL = 10 - 0.5L. The wage rate is $10. Assume that there are no hiring or training costs. If the firm expects the price of output to be $10, what is the optimal level of

Question Labour is a variable input into the production process. In this sense, a change the amount of labour used in production (the number of employee hours) lead to proportionate change in labour costs. However, some other labour-related costs may als Occur. a) Define "quasi-fixed costs" and give three examples of them. b) Assume a t-period of setting. Write down the mathematical expression that describes the profit-maximizing employment rule of a firm when there exist quasi-fixed costs. Explain what this expression means. c) Consider a firm that only exists for one period. The value of labour's (L) marginal product is given by VMPL = P × MP₁, where P is the price of output, and MPL = 10 - 0.5L. The wage rate is $10. Assume that there are no hiring or training costs. If the firm expects the price of output to be $10, what is the optimal level of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Answer b part
When Marginal Product of Labor intersects the Average product of labor, minimum average product of labor obtains at the intersection. True False
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MC Qu. 41 If the variable cost curve is a straight... If the variable cost curve is a straight line, then the marginal cost curve will be horizontal. marginal cost curve is upward sloping. Omarginal cost curve will be U-shaped. Omarginal cost curve may be U-shaped.
Let's assume that in Ventura, a toaster company was manufacturing 3,000 units of toasters at the total cost of $141,000. Currently, it is manufacturing 5,000 units and the total cost is $200,000. This toaster company is experiencing Group of answer choices economies of scale none of the other answers diseconomies of scale constant returns to scale
Assume there is a linear isoquant where the input combination K = 10, L = 0 produces Q = 100. Assume that this isoquant has a MRTS (marginal rate of technical substitution) such that an increase in L by 1 unit requires the firm to give up – ½ unit of K. Assume PL= $1 and PK = $1.What is the smallest total cost necessary to produce Q = 100?
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Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 5 workers the firm produces 85 units of output. Fixed costs of production are $5 and the variable cost per unit of labor is $10. The marginal product of the sixth unit of labor is 4. Given this information, when the firm hires 6 workers the total output is amount to $ variable costs are $ production (rounded to the nearest cent) is cents. units, the fixed costs and the average total cost of
Firm "Happy Capitalist" has following production function: f(K, L) = 2*k0.2L0.8. Furthermore, it is known that cost of capital (r) is equal to 2 and cost of labour (w) is 4. Having said that, capitalist wishes to maintain an output of 250 at lowest possible cost. We ask: a) Solve cost minimisation. Also, is it a corner solution or an interior solution; b) Graph previous result: isoquant and isocost of production; c) Determine average productivity of each factor; d) Is it a function with returns to scale of what type, increasing, decreasing or constant? e) Calculate elasticity of input-output