Ab isocost linejdentifies a. The least costly combination-of-inputsmeeded to-produce a given level of output bHEhe relative prices of inputs c. The technological relationships among inputs. d. The rate at which one input can be substituted for another in the production ...... process.
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- In choosing a production technology, how will firms react if one input becomes relatively more expensive?Suppose there are two inputs for production, labor and capital. The firm’s production process isdefined by the following production functiony=f(L,K).Howdoweinterpretthefirm’smarginalrateof technical substitution? a)How many units of capital the firm would have to give up in order to attain one more unit oflabor, such that the firm maintains the same cost level b)How many units of capital the firm would have to give up in order to attain one more unit oflabor, such that the firm produces one more unit of output c)How many units of capital the firm would have to give up in order to attain one more unit oflabor, such that the firm maintains the same level of production d)a) and b) are correct e)a) and c) are correctThe manager's job in leading the previously mentioned production process is twofold: (1) toguarantee that the company works on the production function, and (2) to ensure that thebussiness employs the appropriate level of inputs. Justify how these two factors contribute tothe company operating at he optimal position the production function.
- A firm has the production function F(L, K) = L^1/2 + K^1/2The price of labor is $10 and the price of capital is $15. The firm has a production goal of Q = 100 units ofoutput.a) Neatly specify this firm’s cost minimization problem, using the particulars associated with this problem.b) Give two equations that an interior solution satisfies, tailoring your equations to the particulars of thisproblem.c) Solve the two equations for the firm’s optimal choice. Show your work.Please no written by hand solution 3) Read the Chicago Tribune article titled “At Amazon’s Monee Warehouse, Robot Co-Workers are the New Normal”. Over the long run, it appears that Amazon is working towards min- imizing its operating costs by reallocating its factors of production away from labor and towards robots (i.e., capital). Using the cost minimization model discussed in class, explain how rising relative wages likely incentive Amazon to invest in robots. 4) All else equal, which is steeper, the demand curve for a normal good or the demand curve for an inferior good? Explain.4 5) Assume that the price elasticity of demand (PED) for a firm’s out is PED = −0.75 and that the price of its output is currently at p = $10. (a) How would this firm’s revenues change if it increased its quantity produced by a little bit? Explain. (b) Instead of increasing its quantity produced, how would this firm’s revenues change if it increased its price a bit? Explain.An isocost line identifies The leat costly combination of inputs needed to produce a given level of output. The relative prices of inputs. The technological relationships among inputs. The rate at which one input can be substituted for another in the production process.
- Provethatthetechnologyf(L,K)=L2+K2 exhibitsincreasingreturnstoscale. What is the formula for the average product of capital? For the total cost curve TC(q) = q3, prove the technology exhibits decreasing returns to scaleDoes the value of λ change if the budget changes from $4600 to $5600?What condition must a Cobb-Douglas production function q = cKαW β satisfy toensure that the marginal increase of production is not affected by the size of thebudget?Please complete the below table. Output TotalFixed Cost TotalVariable TotalCost AverageFixed AverageVariable AverageTotal cost MarginalCost 0 20 1 10 2 6 3 24 4 13.5 5 66 6 14 7 76 8 114
- Consider an item that is ordered on a monthly basis. The daily demand for the item is200 and the lead-time for supply is 7 working days. A month consists of 25 workingdays. the cost of ordering is USD 100 per order and the cost ofcarrying inventory is USD 10 per unit per year of inventory.a. What will be the cost of the existing plan of ordering inventory?b. What will be the economic order quantity (EOQ)?c. What will be the new cost of the plan if the organization chose to order as perEOQ?Let the production function be Q = 4∗K1/4L1/4 assume that both factors are variable. (a) Derive the contingent demand functions for K and L (b) Substitute the contingent demand functions in the total cost that you minimized in part a) to obtain the total cost function. (c) FindtheamountofKandLnecessarytoproduceQ=8whenv=16andw=1 (with minimal possible cost). (d) Find the average and marginal cost functions.A firm face the production function:Q=120L+200K-L2-2K2It can buy L at N5 a unit and K at N8 a unit with a budget of N70. Use any method ofyour choice to find the maximum output the firm can produce.