Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Suppose that a year after opening, Kenji has developed a new system that has increased the productivity of his pizza restaurant, changing the production function to
q
2
=8K
0.5
L
0.5
. Complete the fourth column of the previous table by entering the number of workers required to produce 48 pizzas per hour based on the given number of ovens and his new production function. (Note: Because it is not possible to hire fractional workers, you must round to the nearest whole worker when necessary.) Using your most recent calculations, use the orange points (square symbol) to plot the isoquant representing
q
2
=48
.
Assume that Donnell Corp. is currently producing 500 units of output per period, using 25 units of labor and 20 units of capital. Values for the marginal product of each input and the prices of the inputs are as follows: MPK = 100, MPL = 200, w = 2, and r = 3. Given the information above, which of the following is true?
a. The firm is currently using the optimal levels of capital and labor.
b. The firm should increase labor and reduce capital usage.
c. The firm is not using the optimal levels of capital and labor, and it is impossible to determine the optimal levels from the given information.
3) If we duplicate all the production factors of the production function f (L,K) = L 2/3. K1/3, where L are working hours, k the capital then
the amount of product will be multiplied by:
Choose one:
A) 4
B) 2
C) 1
D) 8
E) 0.5
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- How would you determine that a two-input Cobb-Douglas production function has decreasing returns to scale (DRS), increasing returns to scale (IRS) or constant returns to scale (CRS) depending on whether α1 + α2 is larger than, smaller than, or equal to one?arrow_forwardIf the production function is Q = 30 + 22L + 44K, what’s the most you can produce with 9 workers (L) and 2 unit of capital (K)?Enter as a value.arrow_forwardOutput is produced according to a production process given by: Q = 4LK, where L is the quantity of labor input and K is the quantity of capital input. If the price of K is $10 and the price of L is $5, then what is the cost-minimizing combination of K and L capable of producing 32 units of output?arrow_forward
- Suppose that the production function is given by Y=AK0.4N0.6. What is the percentage change in output if both capital and labor rise by 42%? Write the answer in percent terms with up to two decimals (e.g., 10.22 for 10.22%, or 2.33 for 2.33%).arrow_forwardSuppose the production function for widgets is given by q=KL+6L²-0.1L³ where q represents the annual quantity of widgets produced, K represents annual capital input and L represents annual labor input. A) Suppose K=10. At what level of labor input does average product of labor reach a maxiumum? How many widgets are produced at that point? B) Again assuming that K=10, at what level of labor input does MPL=0? C)Determine and show whether the production process exhibits law of diminishing returns.arrow_forwardThe equation below is a production function,Q = (200)L + (100)K – (0.2)L2 – (0.1)K2 , where Q is output, L is labor and K is capital. What is the Marginal Product of capital of this function? 200 - (0.4)L - (0.2)L 100 - (0.2)K - (0.1)Karrow_forward
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