Microeconomics, Student Value Edition (6th Edition)
6th Edition
ISBN: 9780134125756
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 11.A, Problem 11PA
To determine
Isoquant, Input price ratio and input combination.
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Draw an isoquant-isocost line graph to illustrate the following situation and the change that occurs:
Ebba Kantzen can rent pizza ovens for $875 per week and hire workers for $500 per
week. Currently, she is using 4 ovens and 7 workers to produce 20,000 pizzas per week and has
total costs of $7,000. Then Ebba reorganizes the way things are done in her business and achieves
positive technological change.
week
Use the three-point curved line drawing tool to draw an isoquant curve for 20,000 pizzas per
prior to the technological change and an isoquant curve for 20,000 pizzas after the technological
change. Properly label the curves.
Carefully follow the instructions above, and only draw the required objects.
Capital (ovens per week)
20-
18-
16-
14-
12-
8-
4
2-
0-
Isocost
0
2
4
6
Labour (workers per week)
L
8 10 12 14 16 18 20 22 24
Q
Q
When analyzing isoquants, if the marginal product of all inputs double, how would that change the input mix you would use to produce a given level of output?
Lauren runs a chili restaurant in San Francisco. Her total revenue last year was
$110,000. The rent on her restaurant was $48,000, her labor costs were $42,000,
and her materials, food and other variable costs were $20,000. Lauren could have
worked as a biologist and earned $50,000 per year. An economist calculates her
implicit costs as
A) $110,000.
B) $50,000.
C) $63,000.
D) $150,000.
Chapter 11 Solutions
Microeconomics, Student Value Edition (6th Edition)
Ch. 11.A - Prob. 1RQCh. 11.A - Prob. 2RQCh. 11.A - Prob. 3RQCh. 11.A - Prob. 4PACh. 11.A - Prob. 5PACh. 11.A - Prob. 6PACh. 11.A - Prob. 7PACh. 11.A - Prob. 8PACh. 11.A - Prob. 9PACh. 11.A - Prob. 10PA
Ch. 11.A - Prob. 11PACh. 11.A - Prob. 12PACh. 11.A - Prob. 13PACh. 11.A - Prob. 14PACh. 11.A - Prob. 15PACh. 11 - Prob. 11.1.1RQCh. 11 - Prob. 11.1.2RQCh. 11 - Prob. 11.1.3PACh. 11 - Prob. 11.1.4PACh. 11 - Prob. 11.1.5PACh. 11 - Prob. 11.2.1RQCh. 11 - Prob. 11.2.2RQCh. 11 - Prob. 11.2.3RQCh. 11 - Prob. 11.2.4RQCh. 11 - Prob. 11.2.5PACh. 11 - Prob. 11.2.6PACh. 11 - Prob. 11.2.7PACh. 11 - Prob. 11.2.8PACh. 11 - Prob. 11.2.9PACh. 11 - Prob. 11.2.10PACh. 11 - Prob. 11.2.11PACh. 11 - Prob. 11.2.12PACh. 11 - Prob. 11.3.1RQCh. 11 - Prob. 11.3.2RQCh. 11 - Prob. 11.3.3RQCh. 11 - Prob. 11.3.4PACh. 11 - Prob. 11.3.5PACh. 11 - Prob. 11.3.6PACh. 11 - Prob. 11.3.7PACh. 11 - Prob. 11.3.8PACh. 11 - Prob. 11.3.9PACh. 11 - Prob. 11.3.10PACh. 11 - Prob. 11.4.1RQCh. 11 - Prob. 11.4.2RQCh. 11 - Prob. 11.4.3RQCh. 11 - Prob. 11.4.4PACh. 11 - Prob. 11.4.5PACh. 11 - Prob. 11.4.6PACh. 11 - Prob. 11.4.7PACh. 11 - Prob. 11.4.8PACh. 11 - Prob. 11.4.9PACh. 11 - Prob. 11.4.10PACh. 11 - Prob. 11.5.1RQCh. 11 - Prob. 11.5.2RQCh. 11 - Prob. 11.5.3PACh. 11 - Prob. 11.5.4PACh. 11 - Prob. 11.5.5PACh. 11 - Prob. 11.5.6PACh. 11 - Prob. 11.5.7PACh. 11 - Prob. 11.5.8PACh. 11 - Prob. 11.5.9PACh. 11 - Prob. 11.6.1RQCh. 11 - Prob. 11.6.2RQCh. 11 - Prob. 11.6.3RQCh. 11 - Prob. 11.6.4RQCh. 11 - Prob. 11.6.5RQCh. 11 - Prob. 11.6.6PACh. 11 - Prob. 11.6.7PACh. 11 - Prob. 11.6.8PACh. 11 - Prob. 11.6.9PACh. 11 - Prob. 11.6.10PACh. 11 - Prob. 11.6.11PACh. 11 - Prob. 11.6.12PACh. 11 - Prob. 11.6.13PA
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- What is the difference between a fixed input and a variable input?arrow_forwardBased on the table you created in image, Choose one isoquant and compute two MRTS at least! (for an example from point A to B and from B to C)arrow_forwardBrian uses wool (K) and labour (L) to produce t-shirts (q). The production function is: q = min{1/3L, 2K}. The inputs are perfect complement.If he uses 0.5 kg of wool and 3 hours of labour, he can produce 1 t-shirt. Draw isoquants for q = 1, q = 2 and q = 3 on a diagram with labour on horizontal axisand wool on vertical axis.arrow_forward
- Brian uses wool (K) and labour (L) to produce t-shirts (q). The production function is: q = min{1/3L, 2K}.If he uses 1 kg of wool and 3 hours of labour, he can produce 1 t-shirt.1. Draw isoquants for q = 1 and q = 2 on a diagram with labour on the horizontal axis and wool on the vertical. 2. The pice of wage per hour is given by w=$10 and the price of each kg of wool is given by r=$4. What is the optimal bundle of that he can produce in order to minimise costs? Draw the isocost lines.arrow_forwardOne isocost line can intercept an isoquant. Select one: O True O Falsearrow_forwardIsoquant curves and isocost curves are tools that can explain how a firm might best respond to changes in the production environment. Present an example of an isocost curve where labor and capital are the two inputs, and explain what it is using language someone not trained in economics could understand. Present an example of an isoquant in the same diagram you used for your isocost curve, and draw the isoquant so it cuts the isocost curve twice. Explain what an isoquant is using language someone not trained in economics could understand. Label the two points A and B, where the isocost and isoquant curves intersect. Present a logical argument that explains why the firm should operate neither at point A nor point B, and present a point that would be optimal by drawing a new isoquant curve in the diagram. Add a second isocost curve to your diagram such that the firm is spending more money on inputs. Add a third isoquant to your diagram to show a firm that would become more capital…arrow_forward
- Using the information from the isoquant/isocost diagram to the right and assuming that PL = P = $2, complete the table below. (Enter your responses as integers.) Output Units 100 200 300 Total Cost of Output $100 $ $300 Units of Labor Demanded 25 50 Units of Capital Demanded 4 50 75 Units of capital (K) 200 175- 150- 125- 8100- 75- 50- 25+ 0+ 0 25 50 9=100 9 200 100 125 150 q=300 75 Units of labor (L) 175 200 Q Qarrow_forwardA commercial fisherman notices the following relationship between hours spent fishing and the quantity of fish caught: Hours Quantity of Fish (in pounds) 0 hours 0 lb. 1 10 2 18 3 24 4 28 5 30 What is the marginal product of each hour spent fishing? Use these data to graph the fisherman’s production function. Explain its shape. The fisherman has a fixed cost of $10 (his pole). The opportunity cost of his time is $5 per hour. Graph the fisherman’s total-cost curve. Explain its shape.arrow_forwardWhy is the point of isoquant tangent to the isocost called the optimal combination?arrow_forward
- Draw the production function of Bruno’s firm. Your diagram should have the number of workers on the horizontal axis and the number of windscreens on the vertical axis. Illustrate the effect of Bruno’s decision to use more robots on his production function. Briefly explain your diagram within 50 words.arrow_forwardIsoquant curves The Firm can trade two doctors for five gardeners and output remains constant What is the shape is the isoquant curve for the firm? (doctors on x axis) Find slope of curve at: (20,15) (5,25) (5,15)arrow_forwardExhibited in the table below are the two isoquants and the isocost for a hypothetical firm A B C D E F Labor 40 28 18 10 4 0 Capital 1 2 3 4 5 6 Labor 80 38 28 20 14 10 Capital 1 2 3 4 5 6 Labor (P2/unit) 25 20 15 10 5 0 Capital (P5/unit) 0 2 4 6 8 10 In a single graph, please perform the following: A. Draw the Isoquant curve B. Draw the isocost C. Identify the optimal point which is tangent to the isoquant line. Please mark the spot as X. D. How many units of capital and labor is the optimal combinationarrow_forward
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