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- Q(A) Use the following information to show the producers equilibrium under the isoquant/ isocost approach. a) Data below shows the combinations of two factor of production. Use the following data and plot the isoquant curve. combinations units of uk unit of l A 18 2 B 12 3 C 9 4 D 6 6 E 4 9 F 3 12 G 2 18 (b) Let the price of labor is Rs 1 per unit and the price of capital is Rs.4. Total expenditure of the firm is Rs.36 then find two bundles to plot isocost line.What is marginal rate of technical substitution?Explain the fact that typical person employed in production worked 55 hours per week in 1900, 40 hours in 1940 and 34 hours in 2010. Use income and substitution effects in your explanations?
- What is technical rate of substitution? Show it graphically.Calculate the marginal rate of technical substitution (MRTS)Illustrate the appropriate change and specify whethereach change represents an increase or a decrease. e. Ian, a manager at Kiddles Supermarket, decides to forego his vacation to NewYork when he learns that all employees’ salaries will be cut by 5 percent at theend of the month.
- How does the curvature of an isoquant relate to the marginal rate of technical substitution along an isoquant?In production theory, diminishing rate of technical substitution(RTS) shows how one input is substituted for the other. This also means that isoquants must be convex . True or false and explainAssume the following production function (photo aswell) q = [0.3k^(-1)+ 0.7l ^(-1)] ^(-1) a) Determine the rate of technical substitution, RTS. b) Determine the elasticity of substitution. c) What would happen to the capital intensity if the relative factor price w/v were to increase by 10%? d) If the elasticity of substitution were higher than what you calculated in (b), would the effect of a 10% increase in the relative factor price w/v on the capital intensity be higher or lower than what you calculated in (c)? Explain your reasoning.
- Question: Suppose the firm's only variable input is labor. Using the table, what level of output corresponds to where the firm's production fuction begins to rise at a diminishing rate? Also, at what level of output would the firm's average product of labor (APL) be maximized? Explain.If the economy uses inputs efficiently, then (pls select all that applies) Group of answer choices a) MRTS = 1. b) MRTS must be equal to the slope of a firm’s isoquant curve. c) the ratio of input marginal products must be equal to the ratio of input prices. d) the quantity of one output cannot be increased without decreasing the quantity of the other. e) every firm’s MRTS is equal to every consumer’s MRS. f) every firm’s MRTS is equal to the ratio of input prices. g) MRTS = MRT. h) outputs are on PP29. Why is the point of isoquant tangent to the isocost called the optimal combination? Explain.