QI Suppose that TC0 = $2000, w = $90, and r = $60. a. Graph the isocost line corresponding to a total cost of $2,000. Be sure to label the axes and points of interest such as intercepts in the graph appropriately. b. If the price of labor and the price of capital both increase by 10%, how does that affect the isocost line corresponding to total cost of $2,000? Explain and illustrate graphically. c. If only the price of labor increases by 10%, how does that affect the isocost line for TCO = $2000? %3D

QI Suppose that TC0 = $2000, w = $90, and r = $60. a. Graph the isocost line corresponding to a total cost of $2,000. Be sure to label the axes and points of interest such as intercepts in the graph appropriately. b. If the price of labor and the price of capital both increase by 10%, how does that affect the isocost line corresponding to total cost of $2,000? Explain and illustrate graphically. c. If only the price of labor increases by 10%, how does that affect the isocost line for TCO = $2000? %3D

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...

See similar textbooks

Similar questions

If two painters can paint 200 square feet of wall in an hour, and three painters can paint 275 square feet, what is the marginal product of the third painter?
What shapes would you generally expect a total product curve and a marginal product curve to have?
Would you consider an interest payment on a loan to a film an explicit or implicit cost?
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?
Explain how a firm’s production function is related toits marginal product of labor, how a firm’s marginalproduct of labor is related to the value of its marginalproduct, and how a firm’s value of marginal productis related to its demand for labor
Suppose that output is a function of labor and capital. Assume that labor is the variable input and capitalis the fixed input. Explain the law of diminishing marginal product. How is the law of diminishingmarginal
Con Co. produces a collectible card game. Currently, the price of capital is at $50 and the price of labor is at $10. The marginal product of capital is 200 and the marginal product of labor is 30. To minimize cost of the given output, Con Co. should Use more capital Use more capital and labor Leave capital and labor as is Use more labor
For the part B, on opportunity cost, should the 200k be added to (0.06*200k) again in addtion to all other forgone altenative? Kindly explain.
3. Theo employs labor at a competitive wage (W) of $3 per unit, and he employs capitalat a competitive rental rate (R) of $6 per unit.a. State the cost-minimizing rule. You must provide both a written statement of it, and state it as anequation.b. At Theo’s current combination of labor and capital, the marginal product of labor (MPL) is twiceas large as the marginal product of capital (MPK). Is Theo currently employing the optimal ratio oflabor and capital? If not, how should he adjust his hiring of labor and/or capital? Explain.
Only typed answer and please don't use chatgpt Question: In Figure 1, if labor is the variable input and all other inputs are fixed, then at Q4 units of output Group of answer choices: a) total cost is at a minimum. b) marginal product is at a maximum.average variable cost is at a minimum. c) average variable cost is at a minimum. d) the marginal product of labor is less than the average product of labor, (MPL < APL). e) the marginal product of labor is greater than the average product of labor, (MPL > APL).
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
3. Production of taxi rides (15%) GlobalTaxi runs taxi services around the globe. GlobalTaxi uses two inputs in production: capital K and labor L. Capital has a rental cost of r, while labor is paid a wage w. (a) Derive the expression for GlobalTaxi's isocost function with labor on the right-hand side, and explain what it means. (b) Explain what happens to the slope of the isocost function when the wage w increases. How will an increase in w typically affect the choice of inputs for a company that has a smoothly declining marginal rate of technical substitution? Why?