An isoquant curve showsAll the alternative combinations of two inputs that yield the same maximumtotal product.b. All the alternative combinations of two products that can be produced by usinga given set of inputs fully and in the best possible way.All the altemative combinations of two products among which a producer isindifferent because they yield the same profit.d. Both (b) and (c).

Production is the process in which the inputs are used to produce output. There are different inputs…

Answered: An isoquant curve shows All the…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 8P

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An isoquant curve shows All the alternative combinations of two inputs that yield the same maximum total product All the alternative combinations of two products that can be produced by using a given set of input fully and in the best possible way. All the alternative combinations of two products among which a producer is indifferent because they yield the same profit. Both (b) and (c) .
A firm that always employs two workers for each unit of capital follows which type of production function?O. Cobb-DouglasO. substituteO. LinearO. Leontiet
The 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.
onsider a producer with budget C = 200 who can buy labor L at a wage w = 10 and capital K at a price r = 5. The producer has the following production function F(K,L) = 3K1/3 L2/3 . a. Does F(K,L) exhibit increasing, decreasing, or constant returns to scale? Show your work. Consider a new production function F(K,L) = K1/3 L2/3 , where is a? ? positive constant not equal to 3. Does the new production function exhibit increasing, decreasing, or constant returns to scale? b. Using F(K,L) = 3K1/3 L2/3, find the optimal bundle. Show your optimal bundle on a plot (this should include isoquant and isocost curves). c. Suppose the budget is reduced to C = 100 and then C = 50. Find the new optimal bundles. Plot these bundles, along with the initial optimal bundle, on one plot. Draw the expansion path PLEASE SHOW GRAPHS do not use chat gpt
***QUESTION HAS FOUR PARTS - ALL PARTS MUST BE ANSWERED TOGETHER AS THEY ARE DEPENDENT ON EACH OTHER*** 1. A farmer raises apples using land (K) and labor (L), and has an output of ? (?,?) = ? 0.5 ? 0.5 bushels of apples. a. Find several input combinations that give the farmer 6 bushels of apples. Sketch the associated isoquant on a graph, with L on the x-axis and K on the y-axis. b. In the short run, the farmer only has 4 units of land. What is his short-run production function? Graph it for values of L from 0 to 16, with L on the x-axis and output on the y-axis. What is the name of the slope of this curve? c. Assuming the farmer still only has 4 units of land, how much extra output does he get from adding 1 extra unit of labor if he is already using only 1 unit of labor? How much extra output does he get from adding 1 extra unit of labor if he is already using 4 units of labor? d. In the long run, the farmer can change both his amount of land and his amount of labor. Suppose…
Let f: Rn → R be increasing returns to scale. Recall, thismeans that f(αx) ≥ αf(x) for all x ∈ Rn and all α ≥ 1. Further, assume for some vector of inputs, profits are strictly positive. Argue that there is no profit maximizing vector of inputs.
Does 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?
Starting from an initial optimal level of employment and output with well-behaved isoquants. Draw the effect of a decline in the price of labor (horizontal axis), where the substitution effect on capital is larger than the scale effect. Clearly highlight the expansion path in this case and label whats neccessary.
If the per unit price of labor, a variable resource, increases, it causes which of the following? a) A downward shift in ATC. b) An upward shift in MC.
Adam operates a small shop specializing in party favors. He owns the build- ing andsupplies all of his own labor and money capital. Adam incurs no explict rental or wagecost. Before starting his own bussines Adam earned $1,000 per month by renting outthe store and earned $2,500 per month as a store manger for a lrge departmentstore chain. Because Adam use his own money capital, he also sacrificed $1,000 permonth interest earned on U.S government treasury bonds. Adam’s monthly revenuesfrom operating his shop are $10,000 and his total monthly expense for labor andsupplies amounted to $6,000. Calculate Adam’s monthly accounting and economic profits
Suppose that the production technology is Y = min{K, L). We want to produce 10 units of output. The level of wages is W = 2 and the price of capital is R = 3 What is the cost minimizing choice of K and L? What is the level of the cost? (Hint: Plot the isoquant at Y = 10 )

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