Textiles Computers Capital Requirements 10 8 Labor Requirements 10 2 a) Which good, textiles or computers, uses more units of capital in producing one unit? b) Calculate the capital-labor ratios in the production of textiles and computers. Which good's production is capital intensive? c) Which good uses more units of labor per unit of production? d) Calculate the labor-capital ratios in the production of textiles and computers. Which good's production is labor intensive?

Textiles Computers Capital Requirements 10 8 Labor Requirements 10 2 a) Which good, textiles or computers, uses more units of capital in producing one unit? b) Calculate the capital-labor ratios in the production of textiles and computers. Which good's production is capital intensive? c) Which good uses more units of labor per unit of production? d) Calculate the labor-capital ratios in the production of textiles and computers. Which good's production is labor intensive?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 1. Costs for Sedate Sedan, Inc. (adapted from Nicholson). Sedate Sedan, Inc. uses robots and workers to assemble automobiles. There is a diminishing rate of technical substitution between robots and labour: robots do well at tasks that are purely repetitive, while labour does better at jobs that are less boring and require more thought. The various combinations of hours of robot use (r) and hours of labour use (1) needed to assemble sedans are described by the Cobb-Douglas production function: q = f(r,l) = ²√√√² 50 Note that marginal products for this production function are given by: MP: = 1 √r MP₁ Please make sure you know how to calculate them. This production function 100 Vi exhibits diminishing marginal products: the marginal product of robots decreases when more robots are used; the marginal product of labour decreases when more labour is used. The company can rent all the robots it wants for v = 40 dollars per hour and hire all the workers it wants at w = 40 dollars per…
4. COST RELATIONSHIPS. A firm's total costs can be broken down into fixed costs (e.g., rent) and variable costs (e.g., payroll), so TC = FC + VC. Dividing by quantity converts these to averages, so TC/Q = FC/Q + VC/Q, or ATC = AFC + AVC. The additional cost incurred by producing one additional unit is the marginal cost, so MC = ATC/AQ, where the Greek letter delta (A) means "a change in." Here is a table showing the various costs for a simple firm that sells a product using a building (capital, a fixed input) and workers (labor, a variable input). Assume that the price of labor is 20 and the price of capital is 120. Use these three cost relationships to complete the table. Total Total Average Variable Cost, Сapital, Output, Q Labor, Total Average Fixed Average Total Cost, Marginal Cost, MC Variable K Fixed Cost, TC Cost, Cost, TFC Cost, TVC AVC AFC АТС 1 120 N/A N/A N/A N/A 1 2 1 160 3 1 20 3 6. 1 40
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2. Economies of scale are achieved when ... a) Supply consistently exceeds demand b) High energy efficiency levels are reached and maintained c) Waste is kept to a minimum d) Production quotas are raised
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2.)Do fixed costs refer to the long run or short run? Why?3) Suppose that labor is the only variable input in the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal product of labor?4) What are economies of scale? What are economies of scope? What is the difference between the two?
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1 Assume corn is sellling for $6.71 per bushel in greenville, MS, and selling $6.68 per bushel in Cairo,IL. Further assume that the transfer costs between these two points is $0.16 per bushel. What would you do? In your answer identify and descibe the economic concept driving this relationship.
According to a firm’s technology of production, you can take away 3 units of labor if you add 5 units of capital without changing production. The price of labor is $8 and the price of capital is $6. Assuming the firm’s MRTS is diminishing, this firm a. is minimizing cost at its current output level. b. should use more capital and less labor to lower the cost of producing its current output. c. should use less capital and more labor to lower the cost of producing its current output. d. should use less capital and less labor to lower the cost of producing its current output. e. None of above.
Section B- SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. (3 points each) 1) Assume that an individual with an opportunity cost of time of $20 per hour has to choose between renting four apartments. The rents of the four apartments and the individual's monthly commuting time to work are shown in the following table. Calculate the direct cost, indirect cost, and total cost, that the individual will incur if she rents any of these apartments. Also, determine the apartment that is optimum for the individual. Monthly Commuting Time (hours) Apartment Rent ($) 1 60 2,800 2 90 2,200 1,500 1,400 3. 120 4. 150