Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134643175
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 6, Problem 5E
(a)
To determine
The isoquant.
(b)
To determine
The isoquant.
(c)
To determine
The isoquant.
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For each of the following examples, draw a representative isoquant. What can you say about the marginal rate of technical substitution in each case?
a) A firm finds that it can always trade two units of labor for one unit of capital and still keep output constant.
b) A firm requires exactly two full-time workers to operate each piece of machinery in the factory.
If the marginal product of labor is 25 and the marginal product of capital 10, what is the marginal rate of technical substitution of labor for capital?
Prunella raises peaches. She uses L units of labor, and T units of land to produce peaches. Her production function is f(L, T)= L1/2T 1/2
A: Write the equation and plot the isoquant for the output quantity 4.
B: What is the returns to scale of this production function?
C: Find the marginal products of labor and land. What is the rate of technical substitution between land and labor?
D: In the short-run, Prunella cannot vary the amount of land she uses. Plot the output as a function of labor only for the fixed level of land of T=1.
E: Find the marginal product of labor from L=4 and show it on the graph. Is the marginal product of labor diminishing, constant or increasing in labor?
F: Suppose wages are constant and equal w, fixed costs are zero. Find the short-run profit maximizing level of labor for T=1.
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Chapter 6 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (9th Edition) (Pearson Series in Economics)
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- What is the difference between a fixed input and a variable input?arrow_forwardSuppose that during an economic boom labour costs rise by 100% and are expected to stay at that level for a long time, while the rental cost of capital stays the same. Draw the firm’s output expansion path before and after the boom. Assume that the firm has downward sloping strictly convex isoquants. (Draw several isoquants and isocosts). Put labour on the horizontal axis.arrow_forwardAnswer the following questions clearly in computer-typed print with Make sure you label your graphs . Question 1: In the long-run with strictly convex isoquants. If the relative price of labor (?/?)⁄ exceeds the marginal rate of technical substitution (???/???⁄). What changes should happen to the input mix? Explain your answer.arrow_forward
- In production theory, diminishing rate of technical substitution(RTS) shows how one input is substituted for the other. This also means that isoquants must be convex . True or false and explainarrow_forwardIn the long run with strictly convex isoquants. If the relative price of labor (w/r) exceeds the marginal rate of technical substitution (MP.L/MP.k). What changes should happen to the input mix? Explain your answer.arrow_forwardDraw two isoquants for this firm. On the same graph, draw and label firm α’s expansion path at these prices of capital and labor.arrow_forward
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