Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184890
Author: PINDYCK
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 6E
To determine
The
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Distinguish between the Marginal Rate of Technical Substitution and Elasticity of Substitution in production
Can you please check my answers for the following question?
Mandy owns a small coffee shop. Her production function is q=2K0.5L where q is the number of cups of coffee produces, K is the number of coffee machines, and L is the number of employees.
If K=10 and L=20, the marginal rate of technical substitution is: 1
MLP= 2K0.5
MLK = L/K0.5
MRTS= 2K/L = 2(10)/20 =1
MRTS = w/r
Starting from 10 machines and 20 employees, if Joe hires one more employee, then he can use ______ fewer machine(s) and still produce the same quantity of coffee.
1 fewer machine
The marginal rate of technical substitution is:
The rate at which a producer is able to exchange, without affecting the quantity of output produced, a little bit of one input for a little bit of another input.
The rate at which a producer is able to exchange, without affecting the total cost of inputs, a little bit of one input for a little bit of another input.
The rate at which a producer is able to exchange, without affecting the total inputs used, a little bit of one onput for a little bit of another onput.
A measure of the case or difficulty with which a producer can substitute one technique of production for another.
Chapter 6 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
Knowledge Booster
Similar questions
- Joe owns a small coffee shop. His production function is q = 2K0.5 L where q is the number of cups of coffee produces, K is the number of coffee machines, and L is the number of employees. a) If K=1 and L=2, the marginal rate of technical substitution is _________. b) If, starting from 1 machine and 2 employees, Joe hires one more employee, then he can produce the same quantity of cups of coffee with _________ less machines.arrow_forwardConsider the following production functions F(L,K)=LK^3 F(L,K)=L+3K (a) Discuss if each marginal product is diminishing, constant or increasing (b) Calculate the marginal rate of technical substitution (c) Calculate if the function exhibits constant,increasing, or diminishing returns to scalearrow_forwardThe marginal rate of technical substitution of L=2K means that the firm can substitute 2 units of capital for an additional 1 unit of labor in the market. True or false.arrow_forward
- The production function is Q = K.6 L.4. The marginal rate of technical substitution is: 2/3 K-1 L. K-1 L-1. 2/3 K L-1. K.4 L-.6.arrow_forwardAssume a technological change in production that makes both inputs, capital and labour more productive, but that increases more the productivity of capital than the productivity of labour. Explain how this change translates into the shape of the isoquant curves and in the marginal rate of technical substitution. Provide graphs to illustrate your arguments.arrow_forwardSuppose that a firm cannot give up one input in exchange for the other and still maintain the same level of output. Calculate the elasticity of substitution in this case and elaborate on your answer.arrow_forward
- If the production function is F(K,L)=A∗K0.4L0.6 then what is the marginal rate of technical substitutionarrow_forwardConsider the following production function:F (K ,L) = 2K(a) Graph at least two isoquants and clearly identify at least one point in each Obtain the marginal rate of technical substitution (be sure to present all steps in your calculation).arrow_forwardSuppose the price of labor used by a cost-minimizing firm decreases. The firm responds to the price change by changing its demands for certain inputs, but keeps its output constant. What happens to the firm’s use of labor? What happens to the firm’s production costs? Graphically show the new optimal bundle and associated isocost curve on the graph below.arrow_forward
- Suppose a firm is planning to replace a labor intensive production process with an automated robot production line. Calculate the marginal rate of technical substitution (MRTS) using the following information. Labor Intensive Production: 24 workers / 3 machines Automated Robot Production: 10 workers / 30 machines Assume both production process can produce the same level of output.arrow_forwardDefine Cobb-Douglas production. How does the elasticity of substitution (assume sigma = 1) between two inputs affect the shape of a single ISOQUANT? Use a diagram to support your answer.arrow_forwardA firm has a production function of Q = KL + L, where MPL = K + 1 and MPK = L. The wage rate (W) is $100 per worker and the rental (R) is $100 per unit of capital. The firm is producing 100 units of output. In the long run, what is the firm's Marginal Rate of Technical Substitution?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning