Suppose that the price of capital decreases. Explain how the firm adjusts its use of capital and labour in the long run in response to this price decrease.
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Suppose that the price of capital decreases. Explain how the firm adjusts its use of capital and labour in the long run in response to this price decrease.
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- Alice runs a shoemaking factory that utilizes both labor and capital to make shoes. Which of the following would shift the factory’s demand for capital? You can select one or more answers from the choices shown a. Many consumers decide to walk barefoot all the time. b. New shoemaking machines are twice as efficient as older machines. c. The wages that the factory has to pay its workers rise due to an economy-wide labor shortage.What is the difference between short-run and long-run in production theory? *Explain thoroughly*A firm uses two inputs in production: capital and labor. In the short run, the firm cannot adjust the amount of capital it is using, but it can adjust the size of its workforce. What happens to the firm’s average total cost curve, the average variable cost curve, and the marginal cost curve when the cost of renting capital increases? the cost of hiring labor increases?
- When is the firm operating in the short run and when does it operate in the long run? and Discuss the factor(s) that determine how many workers the firm wishes to hire in the long run.Producer theory: suppose a firm has the following production function, given below .Let the wage w=10 and r=rental rate of capital. x=0.147 l 3/10 k 6/10 Suppose w increases what will happen to l,k and x in the short run ?what about the long run ? No need to calculate ,just describes the changes if any.What is the difference between a feasible production plan in the short run and in the long run? Give an example of a real product and the major inputs necessary to produce the product and then a short run and long run production plan.
- Q87 Consider a firm that uses only labour and capital as inputs. At the present use of labour and capital, the MP of labour is four times the MP of capital and the price of labour is twice the price of capital. To minimise its costs for a given level of output, the firm should... a. Decrease both capital and labour. b. Increase both labour and capital. c. Decrease capital and increase labour. d. Stay at its present factor mix. e. Decrease labour and increase capital.In Production Theory, what is meant by a “short-run” production period? What is meant by a “long-run” production period?Shows the lowest possible input costs (combinations of labour and capital) at which different levels of production can be produced a. contraction curve b. contraction path c. expansion path d. expansion curve
- Economics A firm has the production function q = K0.25L0.25 , where K is capital, L is labor, and q is output. The price of capital is v = 4 and the price of labor is w = 4. [You may need this result: if Yα = Z. Then Y = Z1/α]. (i) Derive the firm’s short-run cost function if capital is fixed at K = 16. (ii) Derive the firm’s long-run cost function. (iii) Someone claims that the firm’sWhich of the following statements is (are) correct? (x) Economists distinguish between short run and long run production by assuming that in the short run, at least one input is fixed and in the long run all inputs are variable. (y) In the long run, fixed inputs change to variable inputs so the size of a factory is not fixed in the long run. (z) One would expect to observe diminishing marginal product when the labor force must use a smaller amount of inputs to produce more of the product. (x), (y) and (z) (x) and (y) only (x) and (z) only (y) and (z) only (x) onlyWhich of the following represents the optimal combination of Capital and Labor under the goal of cost minimization in the long run? [MR=Marginal Revenue, MC=Marginal Cost, MPL=Marginal Product of Labor, MPK=Marginal Product of Capital, K=Capital, L=Labor, PL =Price of Labor, PK =Price of Capital] DK/DL = MPL/MPK MR > MC MPL/PL= MPK/ PK MPL = MPK
