The change in the optimal capital-labor ration if both inputs are perfect complements in production and both their prices increase by an identical percentage. Assume the total cost before and after the change in input prices remains the same.
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The change in the optimal capital-labor ration if both inputs are perfect complements in
production and both their
cost before and after the change in input prices remains the same.
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- The change in the optimal capital-labor ration if both inputs are perfect complements in production and both their prices increase by an identical percentage. Assume the total cost before and after the change in input prices remains the same. with clearly and fully labeled graphsexplain your anwer with clearly and fully labeled graphs. The change in the optimal capital-labor ration if both inputs are perfect complements inproduction and both their prices increase by an identical percentage. Assume the totalcost before and after the change in input prices remains the same.Answer the Constrained Optimization: Cobb-Douglas Production Function:1. Based from the factor shares of the two inputs, what will happen to the number of output if it the firm decides to triple both the amount of labor and capital?
- (a) Show that the production function Q = (Kα + Lα)β, where Q is output, K is capital input, L islabour input and α > 0 and β > 0 exhibits diminishing returns when α < 1 and increasing returns to scale when αβ > 1.(b) Specify a translog cost function for two inputs and show that the input shares depend on inputprices.(2) The general Cobb-Douglas production function for two inputs is given by q = f(k,I) = Ak“1® where 0 0, f; > 0, fx 0 (b) Show that (the elasticity of output with respect to capital) e = a and (the elasticity of output with respect to labor) e = BA firm is able to adjust both L and K and has a production function q = KL, where K is the amount of capital and L is the amount of labor it uses as inputs. The cost per unit of capital is r and the cost per unit of labor is w. The (conditional) demand for capital (also known as the optimal level of capital) is given by: O qwr O the square root of qr/w O qw/r O q/wr O the square root of qw/r
- With a production function of if r = $4 and w = $4, how many units of capital and labor will be optimally utilized? All K and no L. All L and no K. Equal amounts of K and L. A combination of K and L not represented above.Consider a production function Q=5K0.75L0.25 , target level of production=5000, cost of labor= 0.5 and rental cost of 0.10. The optimal amount of labor is ____ labor units. Show complete solution pls help meAll of these statements about the production function are true EXCEPT a) the curve features 3 distinct regions: increasing returns to scale, constant returns to scale, and diminishing returns to scale. b)the curve's shape matches and its description of the interaction between the graph's axes represents the law of diminishing returns c) it can be applied to many economic markets d) one variation is used to show the difference between firm and market specific risk
- With a production function of Q = L + 2K if r = $4 and w = $4, how many units of capital and labor will be optimally utilized? All K and no L. All L and no K. Equal amounts of K and L. A combination of K and L not represented above.The Constant Elasticity of Substitution (CES) production function is a flexible way to de- scribe how a firm combines capital and labor to produce output, allowing for different levels of substitutability between the two inputs. The elasticity of substitution, denoted by σ, measures how easily the firm can substitute capital for labor (or vice versa) while maintaining the same output level. The parameter p is related to the elasticity of substi- tution by the formula σ = 1/(1 - p). Now, let's consider a firm that operates for two periods (t and t + 1) and produces output according to the CES production function: F(KN)=[αK² +(1−a]N₁°]¹/º, 0The Constant Elasticity of Substitution (CES) production function is a flexible way to de- scribe how a firm combines capital and labor to produce output, allowing for different levels of substitutability between the two inputs. The elasticity of substitution, denoted by σ, measures how easily the firm can substitute capital for labor (or vice versa) while maintaining the same output level. The parameter p is related to the elasticity of substi- tution by the formula σ = 1/(1 - p). Now, let's consider a firm that operates for two periods (t and t + 1) and produces output according to the CES production function: F(K₁, N₁) = [aK? + (1 - a) No] 1, 0SEE MORE QUESTIONSRecommended textbooks for you