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 output levels. a. Assuming that the price of labor P, is $2, and the price of capital P, is $3. Calculate the total cost of production for each of the five levels of output using the optimal (least cost) technology at each level b. Graph total cost of production as a function of output (Assuming optimal technology is used) Hint : cost on the y-axis, quantity of output on the x-axis Q- 2 KLKL KLKL Q-1 Q-3 Q-4 Q-5 Tech. K 12 7. 11 8 12 7 15

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 output levels. a. Assuming that the price of labor P, is $2, and the price of capital P, is $3. Calculate the total cost of production for each of the five levels of output using the optimal (least cost) technology at each level b. Graph total cost of production as a function of output (Assuming optimal technology is used) Hint : cost on the y-axis, quantity of output on the x-axis Q- 2 KLKL KLKL Q-1 Q-3 Q-4 Q-5 Tech. K 12 7. 11 8 12 7 15

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.10P

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