A firm produces at an output level where the marginal product of labor (MPL) is 50 units and the marginal product of capital (MPK) is 100 units. Suppose that the wage rate (PL) is $25 and the rental price of capital (PK) is $40. a.Is this firm maximzing profit? b.What should the firm do if it is not alocating its budget efficiently?
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A firm produces at an output level where the marginal product of labor (MPL) is 50 units and the marginal product of capital (MPK) is 100 units. Suppose that the wage rate (PL) is $25 and the rental price of capital (PK) is $40.
b.What should the firm do if it is not alocating its budget efficiently?
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- Exercise: A firm produces output according to the following production function: q = A K1/4 L1/4 The price of capital is labeled r and the price of labor is labeled w and there is a set-up cost labeled F. Solve the cost minimization problem and do the following: If A = 6, r = 4, w =25 and the firm wants to produce q = 36, Determine this firm’s demand for capital K*. Group of answer choices a)15 b)45 c)90 d)60An artisan has the total cost of daily production as a function where q represents the number of items produced. Each item can be sold for $ 3.5. Determine the following: a) Criterion of the marginal cost function and average cost function. b) Criterion of the total income function and marginal function. c) Income obtained when marginal utility is zero.Use the concept of diminishing marginal utility to explain the slope of a demand function. Use the concept of diminishing marginal productivity to explain the slope of a supply function.
- A firm is attempting to maximize output given a budget. Draw a graph that illustrates the output-maximizing input combination. Suppose the cost of capital decreases. Show the new isocost line and the new output-maximizing combination of inputs.What are the concepts of microeconomic theory with respect to the supply and demand of the inputs required to produce the good/s and the good/s itself. Consider relating to elasticity/inelasticity; substitutes and complements; derived demand; marginal costing; rival / non-rival goods; price formation.The marginal rate of technical substitution is: The rate at which a producer is able to exchange, without affecting the quantity of output produced, a little bit of one input for a little bit of another input. The rate at which a producer is able to exchange, without affecting the total cost of inputs, a little bit of one input for a little bit of another input. The rate at which a producer is able to exchange, without affecting the total inputs used, a little bit of one onput for a little bit of another onput. A measure of the case or difficulty with which a producer can substitute one technique of production for another.
- A firm uses capital and labor to produce output according to the pproduction function q = 4pKL, for which MPL = 2pK=L and MPK = 2 L=K. a. If the wage w=$4 and the rental rate of capital r=$1,what is the least expensive way to produce 16 units of output? b. What is the minimum cost of producing 16 units? c. Show that for any level of output q, the minimum cost of producingq is $q.Juan Valdez owns a coffee farm in Colombia. His production function is: f(x1,x2)=(x1−1)^0.25 x2^0.5 Assume the price of input 1 is r and the price of input 2 is w. (a) Write down an expression for the technical rate of substitution. (b) Find Juan's demand for inputs conditional on the quantity y of coffee Juan wants to produce. (c) Find Juan's cost function. (d) What is the supply function of Juan's firm?If a manager chooses the amount of an action that sets the marginal benefit of the action equal to its marginal cost, then i. all the units for which the marginal benefit exceed the marginal cost are undertaken. ii. none of the units for which the marginal benefit is less than the marginal cost are undertaken. A. Only ii is correct. B. Only i is correct. C. Both i and ii are correct. D. Neither i nor ii are correct.
- A firm requires labor and capital to produce a given output. Labor costs $8 per hour and capital costs $12 per hour. At the current level of output, the marginal product of labor is 48 and the marginal product of capital is 60. To minimize production costs, in which way should the firm allocate its resources?Suppose that an economy produces 3,000 units of output, employing 60 units of inputs, and the price of the input is $30 per unit. The per-unit cost of production is A) $0.6 B) $0.30 C) $0.10 D)$ 1.00Good X is produced in a competitive market using input A. Explain what would happen to the supply of good X in each of the following situations:a. The price of input A decreases. It will not change. It will increase. It will decrease. b. An excise tax of $3 is imposed on good X. It will not change. It will increase. It will decrease. c. An ad valorem tax of 7 percent is imposed on good X. It will increase. It will not change. It will decrease. d. A technological change reduces the cost of producing additional units of good X. It will increase. It will decrease. It will not change.