(a) To graph: Budget set.

Question

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Answer 1

Question

Chapter 4, Problem 8CACQ

To determine

(a)

To graph:

Budget set.

To determine

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

To determine

(c)

To find:

The prices of goods and consumer’s income.

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A firm operates with the production function Q = K2 L. Q is the number of units of output per day when the firm rents K units of capital and employs L workers each day. The manager has been given a production target: to produce 8,000 units per day. She knows that the daily rental price of capital is $400 per unit and the wage rate is $200 day. a. What is the returns to scale of this production function? Show mathematically. b. Currently the firm employs 80 workers per day. What is the firm’s daily total cost if it rents just enough capital to produce at its target? c. Compare the marginal product per dollar spent on K and on L when the firm operates at the input choice in part (b). What does this suggest about the way the firm might change its choice of K and L if it wants to reduce the total cost in meeting its target? Explain your answer very clearly. d. In the long run, how much K and L should the firm choose if it wants to minimize the cost of producing 8,000 units of output a day?…

Answer 2

Question

Chapter 4, Problem 8CACQ

To determine

(a)

To graph:

Budget set.

To determine

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

To determine

(c)

To find:

The prices of goods and consumer’s income.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 4, Problem 8CACQ

To determine

(a)

To graph:

Budget set.

To determine

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

To determine

(c)

To find:

The prices of goods and consumer’s income.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 4, Problem 8CACQ

To determine

(a)

To graph:

Budget set.

To determine

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

To determine

(c)

To find:

The prices of goods and consumer’s income.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 4, Problem 8CACQ

To determine

(a)

To graph:

Budget set.

To determine

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

To determine

(c)

To find:

The prices of goods and consumer’s income.

Answer 6

Chapter 4, Problem 8CACQ

To determine

(a)

To graph:

Budget set.

Answer 7

Chapter 4, Problem 8CACQ

To determine

(a)

To graph:

Budget set.

Answer 8

To determine

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

Answer 9

To determine

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

Answer 10

To determine

(c)

To find:

The prices of goods and consumer’s income.

Answer 11

To determine

(c)

To find:

The prices of goods and consumer’s income.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 4 - Prob. 1CACQ Ch. 4 - Prob. 2CACQ Ch. 4 - Prob. 3CACQ Ch. 4 - Prob. 4CACQ Ch. 4 - Prob. 5CACQ Ch. 4 - Prob. 6CACQ Ch. 4 - Prob. 7CACQ Ch. 4 - Prob. 8CACQ Ch. 4 - Prob. 9CACQ Ch. 4 - Prob. 10CACQ

(a) To graph: Budget set.

Solution Summary: The author explains that the budget set is the set of all possible combination of goods that consumer can afford within his limited income at given prices.

(a)

To graph:

Budget set.

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

(c)

To find:

The prices of goods and consumer’s income.

Want to see the full answer?

Chapter 4 Solutions

(a) To graph: Budget set.

Solution Summary: The author explains that the budget set is the set of all possible combination of goods that consumer can afford within his limited income at given prices.

(a) To graph: Budget set.

(b) To analyze: If the budget set changes when the prices of both goods double and consumer’s income also doubles.

(c) To find: The prices of goods and consumer’s income.

Want to see the full answer?

Chapter 4 Solutions

(a)

To graph:

Budget set.

(b)

To analyze:

If the budget set changes when the prices of both goods double and consumer’s income also doubles.

(c)

To find:

The prices of goods and consumer’s income.