Problem 3:Your firm produces fan merchandise for a football team. You want to assess if the fouritems manufactured-jerseys', 'caps', 'scarves' and 'shorts' are being produced optimally.In order to do this you increase each of the inputs (capital and labor) by one unit at a timeand record the change in output from the current level for jerseys' and 'caps' while youdecrease the inputs by one unit at a time and record the change in output from the currentlevel for 'scarves' and 'shorts'.Currently, w = $25 and r = $40. The following tables record the different input andoutput levels. Use the values in the tables to arrive at your conclusions about the fourproduction processes.Table 1: Output and Input levels: Production of JerseysOutput Level (q;)| Labor Units (L₁) | Capital Units (K;)451024610245103324132503258Table 2: Output and Input levels: Production of CapsOutput Level (qc) Labor Units (Le) Capital Units (Kc)235423622360105910541051383938Table 3: Output and Input levels: Production of ScarvesOutput Level (dsc) | Labor Units (Lsc) | Capital Units (Ksc)276526652764||77 77 78538521514Table 4: Output and Input levels: Production of ShortsOutput Level (qsh) | Labor Units (Lsh) Capital Units (Ksh)312930293128 Use the relationMPK (K, L)MPL(K, L)a) Jerseysb) Capsc) Scarvesd) Shorts.rWto determine if production is optimal. If you conclude that production is not optimal thenargue how the input levels should be adjusted for each of the four items:

Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Use the relation MPK (K, L) MPL(K, L) a) Jerseys b) Caps c) Scarves d) Shorts. r W to determine if production is optimal. If you conclude that production is not optimal then argue how the input levels should be adjusted for each of the four items:

Use the relation MPK (K, L) MPL(K, L) a) Jerseys b) Caps c) Scarves d) Shorts. r W to determine if production is optimal. If you conclude that production is not optimal then argue how the input levels should be adjusted for each of the four items:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Question: Define the isoprofit curve and the isocost curve

A: Iso means equal. Isoprofit and isocost curve are microeconomic concepts.

Q: Describe the equilibrium conditions in consumer theory (utility maximization) and in production…

A: Equilibrium Conditions in Consumer Theory (Utility Maximization):Consumer theory focuses on how…

Q: Suppose a firm is planning to replace a labor intensive production process with an automated robot…

A: The Marginal Rate of Technical Substitution (MRTS) refers to an economic concept that depicts the…

Q: Briefly explain and graphically illustrate the property of diminishing margincal rate of…

A: The willingness of a consumer to substitute one good for another as long as the new good is equally…

Q: Explain concept Margina important tool of indifference curve analysis of demand

A: The Marginal rate of Substitution (MRS) is a fundamental idea used within the analysis of consumer…

Q: Production Analysis Discuss the similarities and differences between indifference and isocost…

A: Isoquants: In cost and production theory, isoquants play a critical role in determining the optimal…

Q: Brian uses wool (K) and labour (L) to produce t-shirts (q). The production function is: q =…

Q: In the Heckscher-Ohlin (H-O) model, Explain with the help of a graph the effect of an increase in…

A: A relative price is described as the P {"price"} of a service or a commodity that measured in…

Q: Solve it correctly last time incorrect solution provides Q) The marginal products of capital…

A: Given the output, cost is minimized when the following condition is satisfied : MPL/PL =MPK/PK It…

Q: The production function describesA) the relationship between quantity of inputs and quantity of…

A: The process of production is the combining of the raw materials and the skills and knowledge of the…

Q: It is proven mathematically that indifference curves are convex due to: (a) rising marginal rates of…

A: An indifference curve is the locus of all those points which represents the different bundle of two…

Q: A household of a wife and husband get utility from hours spent watching HBO (Z). To produce one unit…

A: Given, Utility from watching HBO for both wife and husband : ZThe cost of subscribing HBO : xThe…

Q: Give two examples of intermediate goods

A: # Goods which are further used in the production of final goods and services are said to be as…

Q: Let F be a function of two variables, defined by F(K, L) = 2 In K + 5 In L. (a) Find RLK= F₁'(K, L)…

A: Elasticity of substitution measures the ease with which one input can be substituted for other.

Q: Question 3. Andre has a salary of $1000. He spend his entire budget on shoes and beers. The cost for…

A: Hi. Since there are multiple questions, we will answer the first three questions. It is given that…

Q: For their birthdays, Vivaan and Saanvi, who are brother and sister, each received 25 iTunes music…

A: Pareto improvement to a system is said to have occurred when a reallocation of resources leaves no…

Q: Calculate your marginal rate of substitution as a function of B and C. U(B,C)= B^(1/4)C^(3/4)

A: The marginal rate of substitution denotes the slope of the indifference curve and is defined as the…

Q: The Pivot in the substitution Effect is

A: Suppose, a consumer has the choice of only two goods, in which if the price of good 1 changes, then…

Q: b) Firm ABC has the following production function Q = 6K³ + 4KL - L3 i. Determine the average…

Q: Explain the economic meaning of the ? matrix and ? vector

A: The production, exchange, and consumption of the usual products and services are the main topics of…

Q: The marginal rate of technical substitution represents the slope of?

A: If there is two input goods x and y used in the production process, then the marginal rate of…

Q: Suppose a firm is planning to replace a labor intensive production process with an automated robot…

A: Given Labor-intensive production: L1= 24 workers and K1=3 machines Automated robot production: L2=…

Q: A firm is producing in Stage I of its production function. What advice would you give this firm? a…

A: 3rd stage of the production function is also called the stage of negative returns. In the third…

Q: The marginal rate of substitution of both of them are not correct.

A: Marginal rate of substitution (MRS): it is the slope of the indifference curve, and it tells us that…

Q: Miles is an engineering student who uses all his income to buy instant coffee and food. Miles's…

Q: If the MPx/Px is less than the MPY/Py, the firm should use more of O Both X & Y inputs O Input X O…

A: Marginal product refers to additional product that occurs by employing one more unit of input.

Q: (b) Now use your calculations in (a) above to approximate the change in the level of utility of the…

A: The marginal rate of substitution is the rate of substitution at which consumers change the…

Q: In industry, when the price of electricity goes up, the company employs more low-skilled workers.…

A: Price: It refers to the cost of the goods and services on which the people purchase goods and…

Q: Determine the marginal rate of substitution of X for Y (MRSXY)(

A: Marginal rate of substitution m refers to the sacrifices made of good- Y due to consuming one…

Q: During the hot days, the Electricity Company generates more electricity by using more fuel and…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer one question at a…

Q: A household of a wife and husband get utility from hours spent watching HBO (Z). To produce one unit…

A: Given,

Q: Constrained Optimization A firm wants to minimize the cost of producing 100 units of output given…

Q: D. In consumer balance, what is the value of the MRSE (Marginal rate substitution B and Anya)? What…

A: The consumer equilibrium reflects the consumer balance which shows the state of balance by consuming…

Q: nput either "increase" or "decrease" where relevant: A decrease in the price of a complementary…

A: At the point when the price of complementary goods increments, keeping other factors consistent,…

Q: Mark launders his white clothes using the production function q=38+G where B is the number of cups…

A: Marginal Rate of technical substitution : Rate at which one factor of production is decreased in…

Q: Input either "increase" or "decrease" where relevant: An increase in the prices of inputs will…

A: Price and supply vary in response to shifts in supply and demand conditions. Equilibrium is…

Q: A. Point A B. Point C C. Point D D. Point G

A: Production possibility curve is used to determine the production level and allocation of resources…

Q: 6. We have the production function, Q= f( K,L). Factor prices are r and w respectively and the…

A: Introduction we have a production function given as Q = f(K,L) Factor prices of the production…

Q: h) Giffen goods i) Marginal Rate of Substitution j) Suppose I have a function f(x1, x2) = provide…

A: According to the law of demand, the quantity demanded of a good is inversely related to the price.…

Question

Problem 3:
Your firm produces fan merchandise for a football team. You want to assess if the four
items manufactured-jerseys', 'caps', 'scarves' and 'shorts' are being produced optimally.
In order to do this you increase each of the inputs (capital and labor) by one unit at a time
and record the change in output from the current level for jerseys' and 'caps' while you
decrease the inputs by one unit at a time and record the change in output from the current
level for 'scarves' and 'shorts'.
Currently, w = $25 and r = $40. The following tables record the different input and
output levels. Use the values in the tables to arrive at your conclusions about the four
production processes.
Table 1: Output and Input levels: Production of Jerseys
Output Level (q;)| Labor Units (L₁) | Capital Units (K;)
45
102
46
102
45
103
3241
3250
3258
Table 2: Output and Input levels: Production of Caps
Output Level (qc) Labor Units (Le) Capital Units (Kc)
2354
2362
2360
1059
1054
1051
38
39
38
Table 3: Output and Input levels: Production of Scarves
Output Level (dsc) | Labor Units (Lsc) | Capital Units (Ksc)
27
65
26
65
27
64
||77 77 78
538
521
514
Table 4: Output and Input levels: Production of Shorts
Output Level (qsh) | Labor Units (Lsh) Capital Units (Ksh)
31
29
30
29
31
28

Use the relation
MPK (K, L)
MPL(K, L)
a) Jerseys
b) Caps
c) Scarves
d) Shorts.
r
W
to determine if production is optimal. If you conclude that production is not optimal then
argue how the input levels should be adjusted for each of the four items:

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Define marginal product and explain the law of diminishing marginal utility advocated by David Ricardo.
Problem 1 a) The local cleaner launders white clothes using the production function q = 3B + G, where B is the number of cups of a brand bleach and G is the number of cups of a generic bleach that is half as potent. a.1) In a graph, draw an isoquant. a.2) What are the marginal product of B and G? What is the marginal rate of technical substitution? Technology
In our paper airplane company, some inputs were fixed and some were variable. Match the input to whether it was VARIABLE or FIXED. Paper- Stapler- Staples- Employees- Production space-
Please answer fast please arjent help please
a. What does an isocost curve represent? b. If the producer's Budget-300 w-5 r-10. Show your procedures (write the isocost equation) and graph the isocost. c. Can you determine if these bundles are part of the same isocost of point b? Set 1(L=44,K-8) Set 2 (L=36,K-12) Set 3 (L=24,K=18)
3) The value for net exports in billions of dollars is A) -200. B)-150 C) 50. D) 250. 4) The value for gross domestic product in billions of dollars is A) 2,900. B) 3140 C) 3,440. D) 3,650.
The inflection point refers to the point where a marginal curve has a slope of zero. a. True b. False
What does it mean when the initial allocation is interim Pareto Efficient
List and discuss three (3) factors affecting the upward sloping curve.
The marginal utility of additional units of a product tends to: Go up Go down Remain constant There is no marginal utility beyond the first unit.
It is proven mathematically that indifference curves are convex due to:(a) rising marginal rates of substitution.(b) the inverse association between the quantity demanded and the price.(c) costs decreasing in value.(d) the marginal rates of substitution being negative.
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?2. State the optimization problem of the firm.3. Solve for the formulas of the Marginal Product of Labor (MPL), and Marginal product ofCapital (MPK)4. Using your knowledge of the tangency condition in Producer’s theory, find the combinationof K and L that the firm should use to produce the maximum possible output. Do not solvethe problem using the Lagrangian method.Note: The tangency conditions just states that the slope of the production function must beequal to the slope of the isocost function.5. What is the maximum possible output that the firm could earn given the constraint it faces?