Suppose that the only inputs your company uses are labor and capital. t is possible to simultaneously have negative marginal returns to labor and increasing returns to scale if the marginal returns to capital are positive and larger marginal returns to labor. As a manager in this situation (negative marginal returns to labor and increasing returns to scale), you can minimize your average total cost in the short run by decreasing the quantity of labor employed What changes would you make in this situation to minimize your average total cost i the long run? (Select all that apply.) A. Decrease your use of labor to the minimum possible amount. B. Change your production process such that labor no longer has a negative marginal product. C. Make changes such that production takes place on the upward sloping portion of the cost curve. than the negative

Suppose that the only inputs your company uses are labor and capital. t is possible to simultaneously have negative marginal returns to labor and increasing returns to scale if the marginal returns to capital are positive and larger marginal returns to labor. As a manager in this situation (negative marginal returns to labor and increasing returns to scale), you can minimize your average total cost in the short run by decreasing the quantity of labor employed What changes would you make in this situation to minimize your average total cost i the long run? (Select all that apply.) A. Decrease your use of labor to the minimum possible amount. B. Change your production process such that labor no longer has a negative marginal product. C. Make changes such that production takes place on the upward sloping portion of the cost curve. than the negative

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. Selpats produces pens with the production function f(k, l) = 200vkl. The price of capital is wk = 40 and the price of labor is wL = 10. (i) Determine the optimal input bundle for producing y pens in the long run and find the long-run cost function. (ii) Determine the optimal input bundle for producing y = 10,000 pens in the long run. (iii) Now suppose that capital is fixed at k = 25 in the short run. Find the short-run total cost function and the short-run marginal cost function. Explain the relationship between the short-run and long-run marginal costs when y = 10,000. (iv) Suppose that the price of output is p. Which value of y maximizes short-run profit? р.
What is the difference between the short run and long run for a firm? How does this relate to fixed and variable inputs?
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KA. A firm produces output with the production function, Q = F(K, L) = K0.5 L0.5 with r=4 and w= 2. The firm is using K=16 and just enough L to produce 16 units of output in the short run. How much could the firm save if it were producing 16 units in the long run?
University level intermediate microeconomics, theory of production
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Consider the production function of the firm below. Which of the following is NOT true? The marginal product of labor at B is 70 units. The total product is increasing as inputs to production increase. The marginal product of capital at point D is 50. The marginal products of both labor and capital are always increasing.
GM cuts jobs at its Australian manufacturing unit GM will cut 500 jobs, or about 12% of its workforce, at its Australian plant because of a sharp fall in demand for its locally-made "Cruze" small car. Source: The Wall Street Journal, April 8, 2013 As GM cuts its workforce, how will the marginal product and average product of a worker change in the short run? Suppose that before the cuts the marginal product of GM workers is below their average product. As the number of workers decreases, the marginal product of a GM worker and the average product of a GM worker in the short run. increases; decreases does not change; does not change decreases; decreases increases; increases decreases; increases
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Consider the following diagram showing a range of isoquants and isocosts, with labour measured on the horizontal axis and capital measured on the vertical axis. Assume that when the firm is producing in the short run, capital is fixed at K but capital is variable in the long run. K, Capital K A B Q3 Isoquant Q2 Isoquant Q₁ Isoquant L, Labour Which of the following can we conclude? O Only point B represents cost minimisation in both the short run and the long run, as it is on the short run expansion path, as well being the cost minimising point in the long run. Points A, B and C represent cost minimisation in the long run only. There are no points that represent cost minimisation in both the short run and the long run. Points A, B and C represent cost minimisation in both the short run and the long run. Points D and E represent cost minimisation in the short run only. Points A, B and C represent cost minimisation but only in the short run. Points D and E represent cost minimisation in…
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1. Suppose the production function is Q = 8L + 15K where Q is the quantity of output, L is the quantity of labor used in production, and K is the quantity of capital used in production. What can be said about this production function? It has Decreasing Returns to Scale It has Constant Returns to Scale It has Increasing Returns to Scale There isn’t enough information to determine the Returns to Scale for this production function 2. You’re dreaming of what to do during a nice summer day. You could mow the lawn which you would pay someone $15 to do for you. You could go for a walk which you value at $11. You could also take a nap and ignore everyone and everything else which you would pay $29 to do. If you to take a nap, what is your opportunity cost? Group of answer choices $29 $26 $15 $11