EBK PRINCIPLES OF MICROECONOMICS
11th Edition
ISBN: 8220100792908
Author: Fair
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 7.A, Problem 2P
To determine
The suggestion to improve profit.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Question 13 Consider a firm whose cost function when both L and K are variable is shown in the figure below. (The following is a description of the figure. In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. A single curve labeled C is shown in the figure. It is a linear curve with positive slope).
Then, the Average cost function associated with this production is:
Vertical
First decreasing and then increasing
Flat
Increasing
Decreasing
Q93
The slope of an isoquant measures the...
a.
Marginal cost of a given level of output.
b.
Ratio of prices of inputs.
c.
Average capital/labour ratio.
d.
Ratio of prices of goods.
e.
Marginal rate of (technical) substitution between factors.
Clear my choice
Question 10
Consider a firm whose cost function when both L and K are variable is shown in the figure below. (The following is a description of the figure. In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. A single curve labeled C is shown in the figure. It is a linear curve with positive slope).
Then, the Marginal cost function associated with this production is:
Flat
First decreasing and then increasing
Increasing
Decreasing
Vertical
Chapter 7 Solutions
EBK PRINCIPLES OF MICROECONOMICS
Knowledge Booster
Similar questions
- Explain and illustrate using isoquants and isocosts how a firm that is currently using the least cost combination to produce its desired quantity of output will respond in the long run to a government policy that (assume it will continue to produce the same Q) a. reduces wages of its workers b. subsidizes the cost of capital used by the firmarrow_forwardIn the graph below, you can see the iso-cost curve and the iso-quant curve for the firm to produce q = 1000 units of output. Note that the vertical axis shows the quantity of capital while the horizontal axis shows the quantity of labor. Suppose that the firm is producing 1000 units of output at point A, using 200 units of capital and 100 units of labor. (i) As an outside consultant, what actions would you suggest to management to improve profits? (ii) What would you recommend if the firm were operating at point B, using 100 units of capital and 200 units of labor? Explain your answer.arrow_forwardPlot an Isocost line for a firm that is spending $10,000 on labor and capital. Then, draw a Cobb-Douglas Isoquant for this firm that intersects your Isocost curve. Label the two intersection points A and B. Draw a second Isosquant that is just tangent to the Isocost curve, and label the point of tangency point C. Explain why it would not be efficient for this firm to produce at point A nor point B.arrow_forward
- The following table describes the various least cost combinations of two inputs from various isoquants. Points Labor (L) Capital (K) Output A 3 6 4 B 6 12 10 C 12 24 21 D 24 48 42 Is this firm operating in the short run or long run? Why? Illustrate the points with an isoquant curves with L is x-axis and K is y-axis. If the price of labor and capital per unit are given by RM20 and RM50 respectively, construct the total cost (TC) and average cost (AC) schedules.arrow_forwardExplain in details whether the underlined part of statement is true or false.. In short-run production with two inputs where land is a fixed input labor is a variable input, once the marginal products of labors start to diminish, firms in perfectly competitive markets must stop hiring additional labors.arrow_forwardQ48 If the marginal product of labor divided by the price of labor is less than the marginal product of capital divided by the price of capital, a firm could minimize costs by Group of answer choices buying less labor and more capital. buying more labor and less capital. continuing to buy the current combination of labor and capital. doubling the amount of labor.arrow_forward
- Consider the following set of data that looks at how output changes following changes in inputs. Quantity of Labour Quantity of Capital Output 0 5 0 10 5 100 20 5 250 30 5 450 40 5 575 50 5 650 Which of the following statements accurately describes what this data shows? (a) The firm experiences increasing marginal returns to labour at all levels of output. (b) The firm experiences first increasing marginal returns to labour and then runs into diminishing marginal returns. (c) The firm experiences diminishing marginal returns to labour at all levels of output. (d) The firm experiences first diminishing marginal returns to labour and then increasing marginal returns.arrow_forwardThe short-run production function for a manufacturer of flash memory drives is shown in the table below. Based on this information, answer the following questions. Input of Labor (workers per week) Total Output of Flash Memory Drives 0 0 1 25 2 60 3 85 4 105 5 115 6 120 a. Calculate the average product at each quantity of labor. b. Calculate the marginal product of labor at each quantity of labor. c. At what point does marginal product begin to diminish?arrow_forwardy= f(x1,x2)=x1ax2b Derive the equation for an isoquant curve. If a=b=0.5 , the price of factor 1 is 12, and the price of factor 2 is 3, find the cost minimizing input combinations and the total cost of producing 40 units of output. Redo part (c), this time by first deriving the firm’s conditional factor demand functions and the cost function.arrow_forward
- Question 11 Consider a call center with production function f(L,K)=30L+300K, where L is units of labor and K is units of capital. Denote by APL(L,K)=f(L,K)/L the so-called average product of labor (here f is the production function of the firm). Suppose that K=2. For which amounts of labor is the Average Product of Labor equal to 10? Between 1 and 10 Between 31 and 40 There is no level of labor for which APL is equal to 10. Between 11 and 20 Between 21 and 30arrow_forwardA firm employs 100 workers at a wage rate of €10 per hour, and 50 units of capital at a rate of €20 per hour. The firm is currently operating at a point on its isoquant curve. At this point, the marginal product of labour is 30, and the marginal product of capital is 50. Which of the following statements is correct? A. The firm is producing its current output level at the minimum cost. B. The firm could reduce the cost of producing its current output level by employing more capital and less labour. C. The firm could reduce the cost of producing its current output level by employing more labour and less capital. D. The firm could reduce the cost of producing its current output level by employing less capital and less labour. E. Both C and D are true.arrow_forwardConsider the following production functions, to be used in this week’s assignment:(A) F(L, K) = 20L^2 + 20K^2(B) F(L, K) = [L^1/2 + K^1/2]^2 (i) Neatly draw the Q = 2,000 isoquant for a firm with production function (A) given above,putting L on the horizontal axis and K on the vertical axis. As part of your answer, calculate three inputbundles on this isoquant. (ii) Neatly draw the Q = 10 isoquant for a firm with production function (B) givenabove. As part of your answer, calculate three input bundles on this isoquant. For your three input bundles,choose one with L = 0, choose one with K = 0, and the third with L = K. PLEASE SHOW ALL WORKarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning