b) There are two firms in the economy. Each firm employs positive amounts of capital and labour. The technology satisfies diminishing marginal rate of technical substitution of labour for capital. Currently, A's marginal rate of technical substitution of labour for capital is 4 while B's marginal rate of technical substitution of labour for capital is 2. Is the current production of the two firms efficient? If not, describe an exchange of inputs that would improve efficiency. Can these production levels of the two firms be observed in a perfectly competitive equilibrium of a production and exchange economy? Explain.
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- b) There are two firms in the economy. Each firm employs positive amounts of capital and labour. The technology satisfies diminishing marginal rate of technical substitution of labour for capital. Currently, A’s marginal rate of technical substitution of labour for capital is 4 while B’s marginal rate of technical substitution of labour for capital is 2. Is the current production of the two firms efficient? If not, describe an exchange of inputs that would improve efficiency. Can these production levels of the two firms be observed in a perfectly competitive equilibrium of a production and exchange economy? Explain c) State the first theorem of welfare economics of a production and exchange economy. Which conditions must be satisfied for the Pareto efficiency of an allocation of a production and exchange economy (assuming that all goods are used, produced and consumed in strictly positive quantities)? Discuss and explainThere are two firms in the economy. Each firm employs positive amounts of capital and labour. The technology satisfies diminishing marginal rate of technical substitution of labour for capital. Currently, A’s marginal rate of technical substitution of labour for capital is 4 while B’s marginal rate of technical substitution of labour for capital is 2. A. Is the current production of the two firms efficient? If not, describe an exchange of inputs that would improve efficiency. B. Can these production levels of the two firms be observed in a perfectly competitive equilibrium of a production and exchange economy? Explain.Table 3-9 Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. Hours Needed to Make 1 Amount Produced in 60 Hours Toaster Mixer Toaster Mixer Maya 6. 3 10 20 Miguel 10 15 6 12 Refer to Table 3-9. Assume that Maya and Miguel each has 60 hours available. If each person divides his/her time equally between the production of mixers and toasters, then total production is O a. 8 mixers and 16 toasters. O b. 3.5 mixers and 6 toasters. O c. 15 mixers and 9 toasters. O d. 20 mixers and 12 toasters.
- ciples of Microeconomics - Spring21 Which of the following is CORRECT? Select one: O a. If a firm is technologically efficient, it is always economically efficient. O b. If a firm is technologically efficient, it is always producing at the lowest costs of production. O c. If a firm is economically efficient, it is always technologically efficient. O d. None of these answers is correct. DUS PAGE NE11 11. Consider the following economy: There are three goods, legume, tillip and quillip, two consumers (called 1 and 2), and two firms (called x and y). Firm x is owned entirely by consumer 1 and makes tillip out of legume according to the simple linear production technology t :::; 3l . That is, for every unit of legume input, this firm produces three times as many (or less) units of tillip. Firm y is owned entirely by consumer 2 and makes quillip out of legume according to the production technology q = 4l. Each consumer initially owns 5 units of legume. Consumer 1 has utility function u1(t, q) = 6 + .4ln(t) + .6ln(q). Consumer 2 has utility function ui(t, q) = 8 +ln(t) + ln(q). (a) What is the general equilibrium of this economy? Assume that firms take prices as given and are profit maximizers, and consumers take prices as given. When you give prices, normalize…Question 18 Six Methods of Production for Chocolate Chip Yummy Yum Yum Cookie Company Method A C Units of Capital 10 15 40 58 60 Units of Labour 80 58 25 15 14 According to the above table, if the price of capital is $4 per unit and the price of labour is $7 per unit, the method that maximizes productive efficiency is: O B OD O A O F 25 40 B.
- Assume that Pablo and Micah can switch between producing baseballs and producing bats at a constant rate. Labor Hours Needed Quantity Produced in 36 Hours to Make 1 bat bat baseball 1 baseball 36 Pablo 3 12 Micah 2 36 18 Refer to Table 3-8. At which of the following prices would both Pablo and Micah gain from trade with each other? O a 15 baseballs for 10 bats Ob. 15 baseballs for 6 bats Oc 15 baseballs for 3 bats Od Pablo and Micah could not both gain from trade with each other at any price.The table below shows the number of units of labour and capital used in 4 alternative production techniques for producing 1000 widgets per month. Technique A В Labour 20 40 46 35 Сaptal 46 39 21 59 If the price of labour is $9 and the price of capital is $6, which production technique minimizes the costs of producing 1000 units of output? ..... O A. A О В. В ОС. D O D. C O E. Any of the techniques have the same cost.The diagram shows Peter and Sam's possible outputs per week when they both perform the same jobs. Which of the following is true? TREES TRIMMED 40 10- Sam Peter 40 80 YARDS MOWED O Poter has a comparative advantage in performing both functions. O Peter performs yard-mowing services at a high opportunity cost than Sam O Sam can perform tree-trimming services at a lower opportunity cost than Peter. O Sam had neither an absolute nor a comparative advantage in performing either function O Peter has a comparative advantage in performing both functions.
- 1.Explain how a firm uses resources price and value data to determine the appropriate combination of capital and labor resources to use in order to maximize profits. 2.how does this change when the firm want to produce a specific quantity of product with the least cost combination of resources? 3. if a software firm estimates that the MP of labor is 3 apps per month and the price is labor is $1100 per month, while the MP of capital is 5apps per month and its price is $2000, should the firm hire more labor and decrease its capital use or increase its use of capital and use fewer labor resources?Consider the following fixed proportions technologies:Technology A uses 3 units of labour and 6 units of capital to produce 10 units of output.Technology B uses 8 units of labour and 4 units of capital to produce 10 units of output.The firm has 6 units of labour and 8 units of capital. lt can use either of the technologies, or combine the two in its production. The maximum amount of output the firm can produce is O fewer than 10 unitsO between 10 and 15 unitsO between 15 and 20 unitsO between 20 and 25 unitsO greater than 25 unitsTable 3-27 Assume that Huang and Min can switch between producing parasols and producing porcelain plates at a constant rate. Labor Hours Needed to Make 1 Quantity Produced in 36 Hours Parasol Plate Parasol Plate Huang Min 16 18 16 14 18 19 Refer to Table 3-27. Assume that Huang and Min each has 36 labor hours available. Originally, each person divided his/her time equally between the production of parasols and plates. Now, each person spends all their time producing the good in which they have a comparative advantage. As a result, the total output of plates increased by O a 1.5. O b. 3. Oc. 9. Od. 0.