Suppose the wage increases. Show that in the long run the firm will hire fewer workers. Decompose the employment change into substitution and scale effects.

Q: Let the Budget of the firm for the inputs be in Pesos 48000 designated as TC : Let the Price of…

A: A) Given total cost (TC) = wL+ rK                               48000      =  600L+ 1200K solving TC…

Q: Decreasing rate of marginal substitution between two inputs occur when the input being added replace…

A: MRTS or marginal rate of substitution refers to the rate at which one input is substituted for other…

Q: Consider the following production function: F (K ,L) = 2K (a) Graph at least two isoquants and…

A: Production function indicates the total production done using the given inputs. An isoquant is the…

Q: An isocost line identifies The leat costly combination of inputs needed to produce a given level of…

A: A business firm enjoys the minimum costly mix of production inputs( such as labor and capital) by…

Q: f the price of capital decreases and the demand for labour decreases then Select one: DA. the scale…

A: Economies of scale is the cost advantage which is being experienced by a firm when it tends to…

Q: For the typical Cobb-Douglas function,                                                            q=…

A: The function is given as follows: The MRTS (Marginal rate of technical substitution) refers to the…

Q: Suppose a firm has two inputs of production, capital K and labour L. The production function is 1 f…

A: Given: MPK=42K-1/2=2K-1/2MPL=42L-1/2=2L-1/2MRTSLK=MPLMPKMRTSLK=2L-1/22K-1/2MRTSLK=KL Formula for…

Q: A firm can manufacture a product according to the production function Q = 2(K)1/2 (L)1/2 where K…

A: The marginal productivity of labor can be found by differentiating the production function with…

Q: True or false The law of diminishing returns implies that the marginal product of labor (MPL) is…

A: MPL: The marginal product of labor is defined as the increase in output or output experienced by a…

Q: Production of taxi rides (15%) GlobalTaxi runs taxi services around the globe. GlobalTaxi uses two…

A: Hi, thanks for the question. As per the guideline we are allowed to attempt the first question. If…

Q: Suppose that the following production fnction is given: Q-4KL For the above production function,…

A: Note: “Since you have asked multiple questions, we will solve the first question for you. If you…

Q: a rational producer can produce after the point where Marginal product MP is less than zero, if the…

A: In economics, a rational consumer is one that make decision to maximize his utility using the given…

Q: Describe the concept of the marginal rate of technical substitution

A: The marginal rate of technical substitution (MRTS) is an economic concept that explains how fast one…

Q: 1

A: Isoquant curve is the possible of two combination of inputs which give same level of production .

Q: Suppose that a firm has the following production function Q(K,L) = AKL² – BL³ where K represents…

A: Given: The production function of a firm- Q (K, L) = AKL2 - BL3 A company has- 1200 units of capital…

Q: If the economy uses inputs efficiently, then (pls select all that applies) Group of answer choices…

A: The marginal rate of technical substitution is the rate at which the utility of one input is…

Q: The combinations of inputs that produce a given level of output are depicted by isoquants. In…

A: MRTS = MPL /MPK  MPL=  dQ/dL ie the first order partial differentiation with respect to L         =…

Q: Explain the properties of production function? Given a production function of this nature AX1a…

A: Production function refers to the physical output of a production process to the physical input of…

Q: Suppose a firm is planning to replace a labor intensive production process with an automated robot…

A: Given  Labor-intensive production: L1= 24 workers and K1=3 machines  Automated robot production: L2=…

Q: Joe owns a small coffee shop. His production function is q = 2K0.5 L where q is the number of cups…

A: Answer - Given in the question- Joe owns a small coffee shop. His production function is q = 2K0.5 L…

Q: A firm produces output with capital and labor. Suppose currently the marginal product of labor is 28…

A: Answer to the question is as follows:

Q: Y 12 SA initial MRTS AK 10 8 diminishing MRTS 6 4 2 IQ = 100 1 2 3 4 5 6 7 Labor (L) A) Assume a…

A:

Q: which of the following statements is true? A) The MP of labor is always negative at short run B)…

A: The marginal product of labor (or MPL) refers to a company's increase in total production when one…

Q: where x and y denote, respectively, the number'of hours of skIlled and current labor force consists…

A: In this question the marginal rate of technical substitution is the rate at which a firm can…

Q: Suppose the price of labor used by a cost-minimizing firm decreases. The firm responds to the price…

A: A cost minimizing firm decides it’s inputs by comparing the marginal-product of its inputs. Cost…

Q: What is the marginal physical productivity (MPP) of the inputs given the function Q=18x21+2x1x2+2x22…

A: Marginal physical product (MPP) is the change in the level of output due to a change in the level of…

Q: Decreasing rate of marginal substitution between two inputs occur when the input being added replace…

A: Marginal Rate of substitution is the slope of isoquant which states that how much change in good Y…

Q: Suppose that a firm cannot give up one input in exchange for the other and still maintain the same…

A: Elasticity of substitution shows the degree at which firms can substitute one input for other for…

Q: The marginal rate of technical substitution is defined by: a. MRTS 2 = MP/P2 b. MRTS 2= MP,MP C.…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: Recall the Cobb-Douglas production function we worked with in class, f (21, 2) = z} z} . What is the…

A: The marginal rate of technical substitution (MRTS) measures the amount of one input needed to give…

Q: Answer the following questions clearly in computer-typed print with Make sure you label your graphs…

A: The isoquant reflects the different consumption combination of two inputs (L and K) that a firm can…

Q: Solve for marginal product (MP) given the following If x = 25 units, Total Product  = 100 units; if…

A: Marginal product is the additional output produced when an input is increased by 1 unit. Marginal…

Q: If isoquants are plotted on a graph with capital measured on the vertical axis and labor on the…

A:

Q: Suppose that a firm's estimated production Q = K3/4L1/4 What is the marginal rate of technical…

A: Marginal rate of technical substitution refers to the ratio of marginal product of labour and…

Q: Define and then derive the expression for the marginal rate of technical substitution.

A: Marginal rate of technical substitution (MRTS) measures the rate at which one factor must give up in…

Q: production function of this nature; AX1aX2b determine the Marginal Rate of Technical Substitution.

A: Marginal rate of technical substitution means the rate at which one factor is substitute by other…

Q: There is no difference between the law of diminishing marginal returns and the law of diminishing…

A: Answer: The given statement is false. Explanation: Law of diminishing marginal returns: When a…

Q: Calculate the elasticity of substitution for the production function

A: elasticity of substitution refers to  the ratio of the two inputs  to a production function with…

Q: The marginal rate of technical substitution of L=2K means that the firm can substitute 2 units of…

A: Given that, The marginal rate of technical substitution of L=2K

Q: Compute the firm's marginal products, and marginal rate of technical substitution. Report the…

A: Given; Production function; f(L,K)=LK Formula to calculate:- MPK=df(L,K)dKMPL=df(L,K)dLMRTS=MPLMPK

Q: If two inputs are perfect substitutes a. The isoquant is a straight line and the MRTS is constant b.…

A: The answer is a. The isoquant is a straight line and the MRTS is constant Therefore, if two inputs…

Q: In the long run with strictly convex isoquants. If the relative price of labor (w/r) exceeds the…

A: The long run isoquant is convex and downward sloping because on isoquant the level of production is…

Q: The production period during which the firm can alter its use of all inputs is known as the Olong…

A: The goods utilised in the creation of other commodities and services are referred to as inputs.…

Q: Suppose a firm did riveted a useful production technique. We can expect:  a. The firm to hire fewer…

A: Labor: - labor is one of the factors of production, any physical and mental work by humans against a…

Q: The wage rate is £10 and the capital rate is £20. If a firm was spending £c, show what combinations…

A: Wage rate and  capital rate are £10 & £20 respectively are the cost of firm which is equal to…

Q: in the long-run with strictly convex isoquants. If the relative price of labor (w/r)exceeds the…

A: Isoquants: An isoquant (meaning equal), is a microeconomic term, it is a contour line that is drawn…