Answered: The wage rate of labor is Rs. 6 and…

The wage rate of labor is Rs. 6 and price of capital is Rs. 2. The marginal product of labor is 16 while marginal product of capital is 4. Can a firm be operating at equilibrium?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 5P

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Question 17 The ________ marginal product of labor occurs because the amount of fixed inputs per labor declines as more workers are hired.The average product of labor__________ if the marginal product of labor is greater than the average product of labor.Increasing: DecreasesDiminishing: DecreasesDiminishing: Increases Increasing: Increases
Q.2 - a) Explain the five fundamental questions that economics attempts to answer. b) What is the difference between a production function and an isoquant? c) Distinguish between individual firm's supply curve and market supply curve. d) What is a production function? How does a long-run production function differ from a short- run production function?
The Production Function for Wilson Company Economists at the Wilson Company are interested in developing a production function for fertilizer plants. They collected data on 15 different plants that produce fertilizer PLANT OUTPUT (TONS) CAPITAL ($) LABOUR (HOURS) 1 605.3 18,891 700.2 2 566.1 19,201 651.8 3 647.1 20,655 822.9 4 523.7 15,082 650.3 5 712.3 20,300 859.0 6 487.5 16,079 613.0 7…
1a. Define average product and marginal product. Briefly explain reasons for a diminishing marginal product. b. What are three stages of production? Which stages reflect a firm’s observed behavior versus experimental situation? Briefly justify your answer.
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Fill in the blanks in the accompanying table shown at the bottom of page and answer the following questions:(Round to two digits after decimal point in computation) What happens to total product when marginal product is negative? What happens to average product when marginal product is greater than average product? What happens to average product when marginal product is less than average product? At what level of variable input does marginal product begin to decrease? At what level of output does marginal cost begin to increase? Summarize the relationship between marginal product and marginal cost. What happens to marginal costs when total product begins to fall? What is happening to average variable costs when they equal marginal costs? Marginal costs will be equal to average variable costs between what output levels? (Note: the 6 units of output is not the correct answer ) What is happening to average total costs when they equal marginal costs? Marginal costs will…
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