Suppose that a firm's production function is: 112 95 Its marginal product functions are: 84 MP = 5K0= 0.5q/L and 70- MPx 5L°K -0 5q/K. 56 The cost of a unit of labor, w, is $20 and the cost of a unit of capital, r, is $80 Isoquants for output of 140 and 280 are illustrated in the figure to the right 42 26- Initially, the firm is producing 140 units of output and has dotermined that the cost-minimizing quantities of labor and capital are 28 and 7, respectively 14- Suppose now that the firm wants to increase output to 280 units. If capital is fixed in the short run, how much labor will the firm require? 14 84 112 LUnts of labor The firm will now require units of labor. (Enter your response rounded to two Unts of capta

Suppose that a firm's production function is: 112 95 Its marginal product functions are: 84 MP = 5K0= 0.5q/L and 70- MPx 5L°K -0 5q/K. 56 The cost of a unit of labor, w, is $20 and the cost of a unit of capital, r, is $80 Isoquants for output of 140 and 280 are illustrated in the figure to the right 42 26- Initially, the firm is producing 140 units of output and has dotermined that the cost-minimizing quantities of labor and capital are 28 and 7, respectively 14- Suppose now that the firm wants to increase output to 280 units. If capital is fixed in the short run, how much labor will the firm require? 14 84 112 LUnts of labor The firm will now require units of labor. (Enter your response rounded to two Unts of capta

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Suppose that a firm's production function is:
112
q= 10L05K0.5
98
Its marginal product functions are:
84
MP =5KL05 = 0.5q/L
and
70
MP 5L05K5 =0.5g/K.
The cost of a unit of labor, w, is $20 and the cost of a unit of capital, r, is $80
Isoquants for output of 140 and 280 are illustrated in the figure to the right
42
20
Initially, the firm is producing 140 units of output and has dotermined that the
cost-minimizing quantities of labor and capital are 28 and 7, respectively.
14+
Suppose now that the firm wants to increase output to 280 units. If capital is fixed
in the short run, how much labor will the firm require?
9.
14
25
42
04
LUnits of labor
The firm will now require units of labor. (Enter your response rounded to two
decimal places. )
K Unts of capta

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Subpart 4
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