Suppose MPL = 20 and MPK = 40 and the rental rate on capital is $10. If the level of production is currently efficient,the wage rate must bea. $10b. $5c. $20d. $40
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Suppose MPL = 20 and MPK = 40 and the rental rate on capital is $10. If the level of production is currently efficient,
the wage rate must be
a. $10
b. $5
c. $20
d. $40
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- A firm’s production is represented by the following function: Q = L1/4 K3/4 . The rental rate of capital (r) is $40 and the wage rate (w) is $12.a. For a given level of output, what should be the ratio of capital to labor in order to minimize costs?b. How much capital and labor should be used to produce 400 units of output? What is the total cost?c. What is the short run total cost if output is decreased to 300 units?d. How would the capital labor choice and total cost change in the long run?e. Would the firm prefer to relocate if input prices are r = 60 and w = 8 at an alternativelocation assuming relocation is costless?2. Suppose a production function is q = K¹211/3 and in the short run capital (K) is fixed at 100. If the wage is $10 and the rental rate on capital is $20, the short run production function is a. q = 10/¹/3 b. g=1002¹/3 C. 1 q= = -11/3 10 d. g = 100Constant returns to scale is the point on a production function where increasing inputs will no longer increase output. True False 00
- Given the following data on input and output levels. Suppose the output price is $5 and input price is $10. Find the values of AVP and MVP when X = 4: X 0 2 4 6 8 10 12 Y 0 100 250 450 600 700 750 $312.50 and $375 $20 and $375 $265.50 and $475 $20 and $750Suppose that the production function for Hannah and Sam's home remodeling business is Q=f(L,K) Q=1040.2K0.3 Assume the wage rate is $8,000 per week and the cost of renting a unit of capital is $2,000 per week. a. What is the least-cost input combination for remodeling 100 square feet each week? Instructions: Round your answers to 2 decimal places. units of labor and units of capital. b. What is the total cost? Instructions: Round your answer to 2 decimal places.Suppose that a unit of capital costs three times as much as a unit of labor.If a firm currently has a technology such that MPK =50, MPL =30, how should this firm adjust its capital and labor choices?
- in an economy with production function Y = 1.5 × K^0.3L^0.7, K = 343, and L = 512. If factor markets are in equilibrium, then the rental price of capital is (approximately) ________, and the real wage is (approximately) ________. A) 0.5; 0.8 B) 7; 8 C) 0.9; 1.35 D) 1.4; 0.4 E) 0.6; 0.9Maria's Umbrellas has a production function given by Q = L0.5K0.5. The wage (W) is $80 per day and the rental per unit of capital (R) is $5 per day. In the long run, how many units of capital will Maria want to buy for each unit of labor?Find the cost minimizing amount of L for a producer to use when faced with the following production function, production goal, wage, and rent: q = L3K1; q = 1200; w = $58; r = $140 Find the cost minimizing amount of K for a producer to use when faced with the following production function, production goal, wage, and rent: q = L2K3; q = 243; w = $20; r = $30
- Production and Costs Analysis • The cost of land is L.E20 per square meter. • The interest rate on capital is 10%. Fill in the missing parts in the following tables to illustrate the behavior of production and costs in the short-run; then determine the optimal level of production according to the number of inputs you are intending to use. • The average wages per unit of labor is L.E1500. Godspeed Ashraf Helmy The production function of the firm End of document I Output Units Land Сapital Egyptian Pounds Labor Square Meters Units 1000 1600 2100 2500 2600 Output FC VC TC MCL MPL AVC AFC ATC 1000 1600 2100 2500 2600 Hint: • Consider land and capital as fixed factors, while labor units as variable factors.Suppose the representative firm of the economy has a production function of the form F(K, N) = AKO.5N 0.5 The marginal product of labor is then given by MP N = 0.5AK0.5N –0.5 . The current capital 3. stock is K = 40. (a) Holding fixed capital at 40, draw a graph of output as a function of labor. What are some important features of this graph? (b) If A = 4 what is the Labor Demand Curve, ND(w), as a function of the real wage w? (c) Suppose labor is supplied inelastically with NS(w)= 10. What is the equilibrium wage w, employment level N, and full employment output Y ? (d) Suppose that productivity unexpectedly increases to A = 6. What is the new equilibrium wage w, employment level N, and full employment output Y ? (e) Depict this change graphically. Denote the original labor supply and demand curves by NS and ND respectively. Denote the new labor demand curve after the productivity shock by ND' . (Does not need to be to scale).For its current level of production, a firm is attempting to minimize its costs. The firm has determined that the marginal product of labor is 10, the marginal product of capital is 20 and the cost per unit of labor is $5, whereas the cost per unit of capital is $10. To minimize cost for the given output the firm should Increase the amount of capital and decrease the amount of labor Leave the amount of capital and labor as they are Decrease the amount of capital and increase the amount of labor
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