A shoe factory has 500 employees and produces a thousand pairs of shoes per hour. What is the shoe factory’s productivity per worker per hour?____________. The factory hires one new worker. Now, the factory produces 1,002 shoes per hour. Then the factory hires one more worker. Production rises to 1,004 per hour. Does the factory have diminishing, constant, or increasing marginal returns at this level of production? Graph the production function (total product curve) of the shoe factory at these levels of production, carefully labeling all lines and points. (need a clear and properly labelled

A shoe factory has 500 employees and produces a thousand pairs of shoes per hour. What is the shoe factory’s productivity per worker per hour?____________. The factory hires one new worker. Now, the factory produces 1,002 shoes per hour. Then the factory hires one more worker. Production rises to 1,004 per hour. Does the factory have diminishing, constant, or increasing marginal returns at this level of production? Graph the production function (total product curve) of the shoe factory at these levels of production, carefully labeling all lines and points. (need a clear and properly labelled

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 3.7P

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QUESTION 1a. Is it possible to have diminishing returns to a single factor of production and constant returnsto scale at the same time? Discuss.b. Isoquants can be convex, linear, or L-shaped. What does each of these shapes tell you aboutthe nature of the production function? What does each of these shapes tell you about theMRTS?QUESTION 2a. A firm faces the following average revenue (demand) curve:P = 120 − 0.02Qwhere Q is weekly production and P is price, measured in cents per unit. The firm’s costfunction is given by C = 60Q + 25,000. Assume that the firm maximizes profits.i. What is the level of production, price, and total profit per week?ii. If the government decides to levy a tax of 14 cents per unit on this product, what will be thenew level of production, price, and profit?b. The United States currently imports all of its coffee. The annual demand for coffee by U.S.consumers is given by the demand curve Q = 250 – 10P, where Q is quantity (in millions ofpounds) and P is the…
The data in the table below represents Total product (TP), for an agri-business involved in potato production. Capital (fixed factor) Labor (variable factor) Output(units) or Total physical product (TPPL) Average physical product (APPL) Marginal physical product (MPPL) 10 0 0 10 1 7 10 2 20 10 3 39 10 4 55 10 5 66 10 6 70 10 7 70 10 8 67 Calculate the marginal product and average product value. At what point do diminishing marginal returns set in? And using the values of AP and MP obtained from part (i), plot the graphs of TP, AP and MP being careful to fully label the graph and explain briefly the law of diminishing marginal returns from your computation. How does the hypothesis of diminishing returns (MP& AP) influence the behaviour of costs (MC& AC)?
Answer the ff. 1. suppose you operate a sandwich shop and currently have 2 employees. if you hire a 3rd employee, your output of sandwiches per day rises from 75 to 90. if you hire a 4th employee, ouput rises to 110 per day. a 5th and 6th employee would cause output to rise to 120 and 125 per day respectively. choose the correct statement a. diminishing returns have not yet set in because output is still increasing b. diminishing returns set in with the hiring of the 4th worker c. diminishing sets in with the hiring of the 5th worker d. diminishing returns set in with the hiring of the 6th worker 2. a production function measures the relation between a. input prices and output prices b. input prices and the quantity output c. the quantity of of inputs and the quantity of output d. the quantity of inputs and the input prices 3. the short run production function assumes that a. the usage of at least one input is fixed b. the level of output is fixed c. all inputs are fixed inputs…
Copy and complete the Table. iv. At what level of output does diminishing returns set in, explain your answer thoroughly. v. Suppose that the price of the firm’s product is GH¢30.00, how much will the firm produce to maximize profit? How much is total profit? vi. Suppose that the price of the firm’s product is now GH¢50.00, how much will the firm produce to maximize profit? How much is total profit? vii. Produce a graph of Total cost, Total fixed cost and Total variable cost (on one graph sheet/excel). viii. Produce a graph of the Average total cost, Average fixed cost, average variable cost, marginal cost (on one graph sheet/excel). ix. Explain the relationship among the total and per unit cost curves.
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For a firm to maximize profit, it must minimize the cost of producing whatever quantity it produces. Use the isocost and isoquant tools to present a firm that is choosing the optimal levels of labor and capital (i.e., tools) to produce a certain quantity and a certain cost. Then, show in your diagram how this firm would respond if it were to expand and spend more on its inputs, assuming it is best for the firm to become more “capital intensive” as it grows. Comment on WHY a firm might best become more capital intensive as it expands, even when the relative prices of labor and capital remain unchanged.
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Fill in the missing parts in the following tables to illustrate the behavior of production and costs in the short-run; then determine the optimal level of production according to the number of inputs you are intending to use. Output Units Land Square Meters Capital Egyptian Pounds Labor Units 0 1000 1600 2100 2500 2600 Output FC VC TC MCL MPL AVC AFC ATC 0 1000 1600 2100 2500 2600 -Hint Consider land and capital as fixed factors, while labor units as variable factors. The cost of land is L.E20 per square meter. The interest rate on capital is 10%. The average wages per unit of labor is L.E1500.