Suppose MPL = 20 and MPK = 40 and the rental rate on capital is $10. If the level ofproduction is currently efficient, the wage rate must be34 a. $10. b. $5. c. $20. d. $40.

The objective of the question is to find out the wage rate in an efficient level of production given…

Answered: Suppose MPL = 20 and MPK = 40 and the…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 16P

See similar textbooks

Similar questions

Differentiate between the Iso quant and Iso cost. If Iso quant is represented by Y = L".75 K 25. and wage rate w = 10, rent of capital r = 5 and total budget M = 500, then find out the optimum combination of inputs.
1 The demand for an input is: a. the VMP of the input. b. derived from input owner's profit-maximizing condition. c determined by MP = W. d. sloping upward. 2 Suppose that production for good X is characterized by the following production function, Q = K°5L05, where Kis the fixed input in the short run. If the per-unit rental rate of capital, r, is $25 and the per-unit wage, w, is $15, then the fixed cost of using 81 units of capital and 9 units of labor is: a. $135. b. $2,025. c. There is insufficient information to determine the fixed costs. d. $2,160.
3) A paper factory signed contract to produce 1000 reams of paper each week for a customer. The paper plant's production function is Q = 4K0.75 L0.25, where Q is output (reams produced), K is the quantity of capital rented, and L is the quantity of labor hired. Each worker is paid $10 per hour and each machine rents for $60 per hour. a. What is the MRTSLK? Demonstrate. b. Find the optimal amount of Labor and capital that is needed to produce 1,000 reams per week. c. What is the firms' total cost of producing the 1,000 reams? d. Draw a diagram of the iso-quant and the iso-cost lines and identify the optimal input combination. e. Suppose the firm needs to increase production to 1,100. Without redoing the full analyses, determine how much additional labor and capital will be needed to achieve this. (This is a one-line answer).
2/3 - Suppose the firm's production function is Q = K¹/³L2/³, where the MPK 2K-¹/3 and MPL 3K-2/3 31¹/3 If the rental rate of capital R is $35 and the wage rate Wis $70, how many units of labor and capital should the firm use to produce 12 units of output? L = 18; K = 9 L = 12; K= 12 L = 9; K= 18 L = 24; K = 24 =
Consider two farms, A and B. The input use and output are given in the following table. The wage = $80 per day and rental price of the machines = $100 per day Farm Labour(L) Physical capital(K) Output(Q) Q/L Q/K TFP A 2 2 200 ? ? ? B 4 1 200 ? ? ? Which farm is more productive according to the productivity measures? Which of the three measures is the most informative measure of agricultural productivity? Why?
The wage rate is $20 per hour and the cost of capital is $30 per hour. At the current output, the firm's MPL is 6 units and MPK is 8 units. In order to maximize profit without changing the production level, the firm should Select one: OA. keep its current level of labour and capital inputs. В. rent more capital and hire less labour c. hire less labour and rent less capital O D. rent less capital and hire more labour
2. A production function is given by the equation Q = 100L04K0.6 Where L is the number of labour units and K the capital units. a. Find marginal product of labour (Q₁) at L=4 and K=10. Interpret the result. aQ L at L=4 and K-10. ƏL Q b. Find the partial elasticity with respect to labour (EQL = Interpret the result. C. When Q-200, the marginal rate of technical substitution at L=4 is -0.21. Interpret that value (MRTS).
In the short‑run specific‑factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land used for planting crops. Round values to the nearest one-half unit. a. Demonstrate a change in the supply of land on the accompanying graph. b. New equilibrium wage is? c. New quantity of agricultural labor is?
Will decrea n he fong run, assume a firm uses both labor and capital to produce 25 units of output. The marginal product of the last unit of labor being employed is 100; the marginal product of the last unit of capital being employed is 500. The wage rate of labor is $10. If the firm is minimizing the cost of producing 25 units of output, what must be the unit price of capital?
A5Charlie's Umbrellas has a production function given by Q = L^0.5K^0.5. 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 Charlie want to buy for each unit of labor?
You own a farm, you hire labor and capital to produce apples. The marginal product of the last unit of labor input is 15 and the marginal product of the last unit of capital input is 45. The market wage for labor is SB. If you are using the optimal combination of inputs, then the price of capital is? Select one: a. $45 Ob. $24 c. $360 Od. $3
5 föt the factors of production be labor and capital equipment. A competitive firm is facing the following input prices: the wage rate is wi = $8 per hour and the rental rate of capital is w2 = $16 per hour. At the current input mix the marginal product of labor is 24 and that of capital is 32. Should the firm change its input mix? Why?

SEE MORE QUESTIONS

Recommended textbooks for you

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

Microeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506893

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Economics: Private and Public Choice (MindTap Cou…

Economics

ISBN:

9781305506725

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

Microeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506893

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Economics: Private and Public Choice (MindTap Cou…

Economics

ISBN:

9781305506725

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Economics:

Economics

ISBN:

9781285859460

Author:

BOYES, William

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

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 34 a. $10. b. $5. c. $ 20. d. $40.