a. To draw: Isoquant graph at output of 40,000 square feet per hour for small mowers. Introduction: Isoquants are curves that represent same level of output at various combination of inputs and are used in determining efficient input mix for lower operational costs. In the given problem, labor shall produce no output without the mowers and similarly, mowers cannot be used without labor, therefore, these goods are complementary and will display a ‘L’ shaped isoquant. In the given graph, curve ‘iq 40,000’ represents isoquant of 40,000 square feet. Point A represent optimum combination of input mix at which the cost is minimum and therefore, firms are likely to operate at this combination. b. To draw: Isoquant graph at output of 40,000 square feet per hour for large mowers. Introduction: Isoquants are curves that represent same level of output at various combination of inputs and are used in determining efficient input mix for lower operational costs. In the given problem, labor shall produce no output without the mowers and similarly, mowers can not be used without labor, therefore, these goods are complementary and will display a ‘L’ shaped isoquant. However, since the input considered is the blade of the mower, 2 blades are used in each mover and therefore, the input mix is in fixed proportion of 2:1. In the given graph, curve ‘iq 40,000’ represents isoquant of 40,000 square feet. Point A represent optimum combination of input mix at which the cost is minimum and therefore, firms are likely to operate at this combination. c. To calculate: Value of ‘K’ and ‘L’ if 40,000 square feet was mowed half by small mower and half by large mower, also when the ratio of division is 1:3 and treatment of fractions in value of ‘K’ and ‘L’. Introduction: Required values can be calculated by putting the values in the production function. Required value for mower blades used (K), and workers (L) used for production can be calculated by inputting them in the production function, since there is no cap on number of workers or mower blades, calculations are to be made on the assumption that the input mix is kept at the most cost effective level, that is, the mix of input is kept study at 1:1 for small mowers and 2:1 for large mowers. When total area is divided in the ratio of 1:1 between small mower and large mowerUse of small mower Total area = 20,000 square feet 20,000 = 5000(L) L= 4 K and L are in ratio of 1:1 K= 4 Use of large mower Total area = 20,000 square feet 20,000 = 8000(L) L= 2 .5 K and L are in ratio of 1:1 K= 2 .5 Cumulative values shall be 6.5 units for L and 6.5 units for K Since labor and mowers cannot be divided in fractions, fraction indicates that either factor are to be rounded up or rounded down, which would result in time savings out of the one hour period or excess time over the one hour period. When total area is divided in the ratio of 1:3 between small mower and large mowerUse of small mower Total area = 10,000 square feet 10,000 = 5000(L) L= 2 K and L are in ratio of 1:1 K= 2 Use of large mower Total area = 30,000 square feet 30,000 = 8000(L) L= 3 .75 K and L are in ratio of 1:1 K= 3 .75 Cumulative values shall be 5.75 units for L and 5.75 units for K Since labor and mowers cannot be divided in fractions, fraction indicates that either factor are to be rounded up or rounded down, which would result in time savings out of the one hour period or excess time over the one hour period. d. To state: Role of engineering data in drawing isoquant for desired quantity of 40,000 square feet or 80,000 square feet for the lawn mowing company. Introduction: Engineering data refers to the study of alternate processes which may be used for the production of desired output, an isoquant would be a curve which joins same level of output under different processes or input combinations. In order to draw an isoquant based on engineering data, initially, alternate processes or combination of capital, which in the given case is represented by use of lawn mower machine and workers for operating these machines are to be to be selected, since one worker can only use one lawn mower, the combination of input shall be a fixed proportion of 1:1 and the isoquant shall have a ‘L’ shape, however, if the company has an option to use larger mowers as well, then the ratio of inputs shall become 2:1 for larger mower, both these points represent two different production functions and when they are plotted on the graph, a combined isoquant shall be constructed by joining these points at desired quantity levels of 40,000 or 80,000 square feet per hour.

EBK INTERMEDIATE MICROECONOMICS AND ITS

12th Edition

ISBN: 9781305176386

Author: Snyder

Publisher: YUZU

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Respond to isaiah Great day everyone and welcome to week 6! Every time we start to have fun, the government ruins it! The success of your business due to the strong economy explains why my spouse feels excited. The increase in interest rates may lead to a decline in new home demand. When mortgage rates rise they lead to higher costs which can discourage potential buyers and reduce demand in the housing market. The government increases interest rates as a measure to suppress inflation and stop the economy from growing too fast. Business expansion during this period presents significant risks. Before making significant investments it would be prudent to monitor how the market responds to the rate increase. Business expansion during a decline in demand for new homes could create financial difficulties.
Place the labeled CS to represent the new consumer surplus in the market and the area labeled PS to represent producer surplus

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