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 units O between 10 and 15 units O between 15 and 20 units O between 20 and 25 units O greater than 25 units

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 units O between 10 and 15 units O between 15 and 20 units O between 20 and 25 units O greater than 25 units

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 42P: A small company that shovels sidewalks and driveways has 100 homes signed up for its services this...

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A small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method Choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital If hiring labor for the winter costs $100/unit and a unit of capital costs 400, what is the best production method? What method should the company use if the cost of labor rises to $20/unit?
The information on three different technologies named as q, v and x is listed in the table below. Note that all of these technologies use different combinations of two types of factors of production, labor and capital, to produce 1000 units of output. Consider the first scenario where the per unit prices of the inputs, labor and capital are $50 and $25 respectively. Technology No of Labors Capital (tons) Cost value ($) A 10 50 B 30 20 C 50 10 Now imagine that a discovery has been made which has led to labor advancements leading to a reduction in per unit price of labor to $10, ceteris paribus. Which technology will a typical firm adopt under these changed circumstances and why? Using the value of costs found, what is the value of the economic rent for this firm?
Table 3-7Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. Labor Hours Needed to Make 1 Pound of Pounds Produced in 24 Hours Meat Potatoes Meat Potatoes Farmer 6 4 4 6 Rancher 3 8 8 3 Refer to Table 3-7. Assume that the farmer and the rancher each has 24 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is Group of answer choices 6 pounds of meat and 4.5 pounds of potatoes. 5.5 pounds of meat and 8 pounds of potatoes. 12 pounds of meat and 9 pounds of potatoes. 5 pounds of meat and 5.5 pounds of potatoes.
Problem # 2 Crew Brew produces a popular brand of beer in its mini-brewery located on a small river in Wisconsin. It uses a special formula, combined with the fresh water from the local stream, to produce a drink popular with local folks and tourists who visit during the summer fishing season, and autumn deer hunting season. The production function of Crew follows the formula: Q=50(K+L)Where Q = Barrels of beer, K = units of capital, and L = units of labor. a) Suppose that capital can be purchased for $8 per unit, and labor costs $6 per unit. What is the optimal combination of inputs for the firm to employ? b) Suppose that the cost of inputs changes to $7 for a unit of capital, and $9 for a unit of labor. What is the new optimal combination of inputs?
A firm has two opportunities for a new plant location, one is in China and the other is inMexico. The firm's production function is given by q = L 0.5 K 0.5 , In China, the cost of laboris w=$15 and the cost of capital is r=$5. In Mexico, w=$10 and r=$10. The firm wants toproduce 100 units of output. Which location should the firm choose for their new plant?Explain why.Note: Please round the optimal amounts of capital and labor at each location to the nearest whole number when making your calculations.Hint: cost-minimization rule.
Suppose that widgets can be produced using two different production techniques, A and B. The following table provides the total input requirements for each of five different total output levels:(Photo)Assuming that the price of labor (PL) is RO 2 and the price of capital (PK) is RO 3, calculate the total cost of production for each of the five levels of output using the optimal (least cost) technology at each level. How many labor hours (units of labor) would be employed at each level of output? How many machine hours (units of capital)? (Graph the total cost of production as a function of output. (put cost on the Y-axis). Which technology is the cheapest at all levels of output. Select one:a. None of the other three answersb. Technology Bc. Neither A Nor Bd. Technology A
In your "toast" production function, you used your labor and a toaster as capital. Keeping capital constant, i.e., with only one toaster if you keep adding the labor, i.e., bring your friends to help you with making toasts, which of the following might happen? Group of answer choices Marginal returns to labor will be a constant. Marginal returns to labor will keep decreasing and, after a point, it will become negative. Marginal returns to labor will keep increasing. Marginal returns to labor will keep increasing and then be a constant.
What is the difference between technology and technological change? A. Technology is the development of new products, while technological change is when a firm is able to produce more output with the same inputs. B. Technology is the process of using inputs to make output, while technological change is when a firm is able to produce the sameoutput using fewer inputs. C. Technology is the development of new products, while technological change is when a firm is able to produce the same output with fewer inputs. D. Technology is when a firm is able to produce moreoutput using the sameinputs, while technological change is the process of using inputs to make output. E. Technology is the process of using inputs to make output, while technological change is when a firm is able to produce more output using more inputs.
The productivity of a certain country with the utilization of x units of labor and y units of capital is given approximately by the function f(x,y)=100x0.65y0.35. (A) Find fx(x,y) and fy(x,y). (B) If the country is now using 300 units of labor and 200 units of capital, find the marginal productivity of labor and the marginal productivity of capital. (C) For the greatest increase in the country's productivity, should the government encourage increased use of labor or increased use of capital?
Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the law of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the foregoing assumptions, answer the following questions: i. Draw the economy’s production possibility frontier on hindsight of the relevant assumption. What happens to the PPF when technological change overwhelmingly favours the production of computers? What happens to the PPF when the economy discovers an improved technology for producing shoes? Assume now that the sacrifice ratio is greater than 1, show what will happen to the shape of the production possibility frontier. vii. Mention three (3) conditions under which the sacrifice ratio between the goods will be…
Production Techniques: I II III IV Labor 4 3 2 5 Capital 2 3 5 2 Answer the question on the basis of the following information: Suppose 15 units of product A can be produced by employing just labor and capital in the four ways shown below. Assume the prices of labor and capital are $3 and $5, respectively. Which technique is economically most efficient in producing A?
Assume that England and Spain can switch between producing cheese and producing bread at a constant Labor Hours Needed to Make 1 Unit of Number of Units Produced in 24 Hours Cheese Bread Cheese Bread England 2 3 12 8 Spain 3 6 8 4 Assume that England and Spain each has 24 labor hours available. If each country divides its time equally between the production of cheese and bread, then what will be the total production of Cheese and Bread? Check to see if the following combination of Chease and Bread could be produced in England. 6 units of cheese and 4 units of bread. 8 units of cheese and 3 units of bread.