Suppose that widgets can be produced using two different production techniques, A and B. The followingtable provides the total input requirements for each of five different total output levels.Q = 1Tech. K LA4 1B1 3TotalCostQ = 2K L2562Q=1$6LKQ = 3Assuming that the price of labor (PL) is $2 and the price of capital (PK) is $1, calculate the total cost ofproduction for each of the five levels of output using the optimal (least-cost) technology at each level.K94Q = 4LK L412711 88 5 12 7 15To do this, complete the table below by calculating the total cost of production, filling in the missingvalues using the optimal (least-cost) technology at each level. (Enter your responses as whole numbers.)Q = 5$27Q=2$ 10Q = 5K LQ = 3$ 17Q = 4$ 26How many labor hours (units of labor) would be employed at each level of output? How many machinehours (units of capital)?To answer this, complete the table below for the units of labor and units of capital that would be used toproduce each level of output. (Enter your responses as whole numbers.)Q=1 Q = 2Q = 3Q = 4Q = 5

Answered: Suppose that widgets can be produced…

Suppose that widgets can be produced using two different production techniques, A and B. The following table provides the total input requirements for each of five different total output levels.

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 widgets can be produced using two different production techniques, A and B. The following
table provides the total input requirements for each of five different total output levels.
Q = 1
Tech. K L
A
4 1
B
1 3
Total
Cost
Q = 2
K L
2
5
6
2
Q=1
$6
L
K
Q = 3
Assuming that the price of labor (PL) is $2 and the price of capital (PK) is $1, calculate the total cost of
production for each of the five levels of output using the optimal (least-cost) technology at each level.
K
9
4
Q = 4
L
K L
4
12
7
11 8
8 5 12 7 15
To do this, complete the table below by calculating the total cost of production, filling in the missing
values using the optimal (least-cost) technology at each level. (Enter your responses as whole numbers.)
Q = 5
$27
Q=2
$ 10
Q = 5
K L
Q = 3
$ 17
Q = 4
$ 26
How many labor hours (units of labor) would be employed at each level of output? How many machine
hours (units of capital)?
To answer this, complete the table below for the units of labor and units of capital that would be used to
produce each level of output. (Enter your responses as whole numbers.)
Q=1 Q = 2
Q = 3
Q = 4
Q = 5

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