MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 3QAP
(a)
To determine
Explain the given statement.
(b)
To determine
Determine what the given statement reflects.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
What is managerial economics? (only 30 words)
A firm uses labor (L) and capital (K) to produce outputs. The following graph shows the iso-quant
curves and iso-cost curves facing this firm. The iso-quant curves are the L-shaped curves. Suppose
the wage rate of labor is $200 (per day) and the rental rate of capital is $100 (per day). What is the
cost of producing 20 units of output (per day) when both labor and capital are variable inputs?
Notice that both inputs are variable.
alae-2
(3.6)
-30
= 20
- 10
O 400
O 600
1000
1200
800
What is a marginal cost? (in detail)
Chapter 11 Solutions
MICROECONOMICS
Ch. 11.1 - Prob. 1QCh. 11.1 - Prob. 2QCh. 11.1 - Prob. 3QCh. 11.1 - Prob. 4QCh. 11.1 - Prob. 5QCh. 11.1 - Prob. 6QCh. 11.1 - Prob. 7QCh. 11.1 - Prob. 8QCh. 11.1 - Prob. 9QCh. 11.1 - Prob. 10Q
Ch. 11 - Prob. 1QECh. 11 - Prob. 2QECh. 11 - Prob. 3QECh. 11 - Prob. 4QECh. 11 - Prob. 5QECh. 11 - Prob. 6QECh. 11 - Prob. 7QECh. 11 - Prob. 8QECh. 11 - Prob. 9QECh. 11 - Prob. 10QECh. 11 - Prob. 11QECh. 11 - Prob. 12QECh. 11 - Prob. 13QECh. 11 - Prob. 14QECh. 11 - Prob. 15QECh. 11 - Prob. 16QECh. 11 - Prob. 17QECh. 11 - Prob. 18QECh. 11 - Prob. 19QECh. 11 - Prob. 1QAPCh. 11 - Prob. 2QAPCh. 11 - Prob. 3QAPCh. 11 - Prob. 4QAPCh. 11 - Prob. 5QAPCh. 11 - Prob. 1IPCh. 11 - Prob. 2IPCh. 11 - Prob. 3IPCh. 11 - Prob. 4IPCh. 11 - Prob. 5IP
Knowledge Booster
Similar questions
- Suppose that you are starting up a lawn-raking business. All of your workers are required to supply their own rakes, so the only cost to you is hiring labor at an hourty rate. Suppose that the market price of raking someone's yard is $50 per lawn and the hourly wage is $25 per hour. The following graph shows the production function (PF) for your business. On the following graph, use the green line (triangle symbol) to plot the daily isoprofit curve that indicates the profit-maximizing level of output. (Hint: Derive the slope of the isoprofit curve and then move the curve up or down until it's in the position you warnt; this is because you do not know the amount of profit that will yield the desired curve.) Then use the black point (plus symbol) to indicate the profit-maximizing level of labor and output per day. Note: You will not be graded on any adjustments made to the graph. 100 90 Isoprofit 30 Profit Max 40 FF 20 LABOR Hours per day LAWNS RAKED PER DAYarrow_forward15. Apple uses labour and machines to produce iPhones according to the production function y = LM, where L is the number of units of labour used and M is the number of machines. The cost of labour is w₁ = 4 per unit and the cost of using a machine is wM = 16. Apple faces a fixed cost of F = 25 for renting its factory. Given these input prices, Apple chooses how much labour and machines to employ in order to minimize the cost of producing any given amount of iPhones y. Apple is therefore solving a cost-minimization problem. (a) If Apple is cost-minimizing, how many workers will it use for each machine? That is, find the number of workers per machine that Apple will employ. (Hint: setup the tangency condition.) Continuing to assume that Apple produces any given number of iPhones y in the cheapest way possible, use the equation defining the number of workers per machine from part (a) and Apple's production function to find expressions for the cost-minimizing choices of labour and machines…arrow_forwardWe know there is a link between productivity and costs. For example, recall the link between the marginal physical product of the variable input and marginal cost. With this in mind, what link might there be between productivity and prices?arrow_forward
- Does optimal use of an input (such as labor) mean maximizing average output (per unit of input)? Explain.arrow_forwardSuppose the price of labor used by a cost-minimizing firm decreases. The firm responds to the price change by changing its demands for certain inputs, but keeps its output constant. What happens to the firm’s use of labor? What happens to the firm’s production costs? Graphically show the new optimal bundle and associated isocost curve on the graph below.arrow_forwardThe table below provides information about the cost of inputs and value of output for the production of a road bike. Note there are four different stages of production. Raw materials Rubber for one tire ($25) Aluminum for the frame ($75) Other component materials ($90) Manufacturing Tire maker sells tires for $40 each Frame maker sells bike frame and components for a total of $275 Instructions: Enter your answers as a whole number. a. What value is added by the supplier of the raw materials? $ b. What value is added by the tire maker? $ c. What value is added by the maker of the frame and components? $ d. What value is added by the bike mechanic? $ e. What value is added by the bike store? $| f. What is the total contribution of the bike to GDP? $ Construction Bike mechanic puts everything together and sells the bike for $375 Sale by the retailer Retailer sells the bike for $600arrow_forward
- Suppose that Maria is starting a food ordering and delivery company. Customers order meals online. Employees prepare the meals and deliver them to customers. Maintenance of the online platform for ordering meals costs the company $5 per day. The company also rents space where orders are prepared. Rent costs $50 per day. To make the deliveries, the business also rents two delivery cars that cost $10 each per day. The costs of ingredients for preparing different numbers of meals are provided in the table below. Maria also has to hire between 0 and 10 workers (depending on the number of meals she chooses to make) to buy ingredients, prepare meals, and deliver the orders. She will pay each employee $120 per day. The first two columns of the table below show how many meals different number of workers can prepare and deliver. Price per meal $50 Workers (Labor L) 0 1 2 3 4 5 6 7 8 9 10 Meals (Output Q) ol- 30 42 52 60 67 73 79 85 90 95 MPL FC Cost of ingredients $10 $75 $100 $121 $138 $152…arrow_forwardSuppose that Maria is starting a food ordering and delivery company. Customers order meals online. Employees prepare the meals and deliver them to customers. Maintenance of the online platform for ordering meals costs the company $5 per day. The company also rents space where orders are prepared. Rent costs $50 per day. To make the deliveries, the business also rents two delivery cars that cost $10 each per day. The costs of ingredients for preparing different numbers of meals are provided in the table below. Maria also has to hire between 0 and 10 workers (depending on the number of meals she chooses to make) to buy ingredients, prepare meals, and deliver the orders. She will pay each employee $120 per day. The first two columns of the table below show how many meals different number of workers can prepare and deliver. Price per meal $50 Workers Meals (Output (Labor L) Q) 0 1 2 3 4 5 6 7 8 9 10 MPL FC Cost of ingredients VC $10 $75 $100 $121 $138 $152 $165 $177 $189 $199 $210 TC AFC 0…arrow_forwarda.)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?b.)What are economies of scale? What are economies of scope? What is the difference between the two?arrow_forward
- Suppose that you are starting up a lawn-raking business. All of your workers are required to supply their own rakes, so the only cost to you is hiring labor at an hourly rate. Suppose that the market price of raking someone's yard is $24 per lawn and the hourly wage is $18 per hour. The following graph shows the production function (PF) for your business. On the following graph, use the green line (triangle symbol) to plot the dally isoprofit curve that indicates the profit-maximizing level of output. (Hint: Derive the slope of the isoprofit curve and then move the curve up or down until it's in the position you want; this is because you do not know the amount of profit that will yield the desired curve.) Then use the black point (plus symbol) to indicate the profit-maximizing level of labor and output per day. Note: You will not be graded on any adjustments made to the graph. 100 90 Isoprofit 70 Profit Max 60 50 40 30 20 10 PF 30 40 50 60 70 80 90 100 10 20 LABOR (Hours per day) LAWNS…arrow_forwardIsoquant curves and isocost curves are tools that can explain how a firm might best respond to changes in the production environment. Present an example of an isocost curve where labor and capital are the two inputs, and explain what it is using language someone not trained in economics could understand. Present an example of an isoquant in the same diagram you used for your isocost curve, and draw the isoquant so it cuts the isocost curve twice. Explain what an isoquant is using language someone not trained in economics could understand. Label the two points A and B, where the isocost and isoquant curves intersect. Present a logical argument that explains why the firm should operate neither at point A nor point B, and present a point that would be optimal by drawing a new isoquant curve in the diagram. Add a second isocost curve to your diagram such that the firm is spending more money on inputs. Add a third isoquant to your diagram to show a firm that would become more capital…arrow_forwardIn an article in the New York Times (Is Junk Food Really Cheaper? September 24, 2011), Mark Bittman compares the cost of a McDonalds meal for four ($28) to the cost of a home cooked chicken with vegetables dinner ($13.78). An economist would say that the "true" cost of the home cooked meal is than $13.78, as we need to add to the cost of groceries (money you pay to buy the ingredients chicken and vegetables) also the lower, amount of money you will be saving when you spend less money on food. lower, negative health effects of eating too much fast food lower, opportunity cost of time you spend to prepare and cook your dinner. higher, benefits of healthy home. cooking, higher, opportunity cost of time you spend to prepare and cook your dinner.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning