Principles of Microeconomics, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134069609
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 7.A, Problem 4P
To determine
Isoquant/isocost diagram.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Isoquant 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…
The following table gives the output achievable for various combinations of inputs. There are only two inputs used in production, labour and capital.
labor input
capital input
1
2
3
4
5
1
20
40
55
60
65
2
40
50
65
70
75
3
55
65
75
80
85
4
60
70
80
90
95
5
65
75
85
95
100
Explain the meaning of an isoquant . Draw the isoquants for the output level of 65 and 75 on the same graph.Define and explain the returns to scale for production with those inputs given above table.
The following table depicts the number of grapes that can be picked in an hour with varying amounts of labor:
Number of pickers (per hour)
1 2 3 4 5 6 7 8Output of grapes (in flats)
10 28 43 54 61 64 65 61Calculate marginal physical product (MPP) and then graph the total product (output) and MPP curves.
Chapter 7 Solutions
Principles of Microeconomics, Student Value Edition (12th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- 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?arrow_forwardShow illustration and explain the special case of production functions "Fixed proportions production function."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
- Suppose the isoquant represents the production of 120 pencils. What will happen to the isocost and isoquant if the following situations occur? a. Labor becomes more costly. b. The budget for production is allowed to increase in order to increase the production of pencils, while keeping the price of inputs the same. c. The demand for pencils suddenly increase, thus increasing its price.arrow_forwardFor 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.arrow_forward(Example short answer questions) Suppose a firm produces cars and the minimum efficient scale is 2,000,000 cars. The inputs are labor and capital (machines), and the cost minimizing input combination to produce 2,000,000 cars in the long run uses 2,000 ma- chines. If the firm produces 1,000,000 cars then the average cost is higher. The cost minimizing input combination to produce 1,000,000 cars uses 1,000 machines. Draw a diagram illustrating the long run average cost curve and two short run average cost curves (one with capital fixed at 1,000 machines and another with capital fixed at 2,000 machines). The diagram should have average cost on the vertical axis and output (number of cars produced) on the horizontal axis.arrow_forward
- Each extra worker produces an extra unit of output up to six workers. As more workers are added, no additional output is produced. Draw the total product of labor, average product of labor, and marginal product of labor curves in a graparrow_forwardLabor (workers per day) Total product (bicycles per day) 0 0 1 4 2 10 3 18 4 25 5 30 The above table shows the relationship between labor input and total product of producing bicycles. The marginal product of the 5th worker is equal to 5 bicycles. 6.25 bicycles. 30 bicycles. 6 bicycles.arrow_forwardFrisbees are produced according to the production function q = 2K+Lwhere q =output of frisbees per hour, K =capital input per hour, L =labor input per hour. a) If K = 10, how much L is needed to produce 100 frisbees per hour? b) If K = 25, how much L is needed to produce 100 frisbees per hour? c) Graph the q = 100 isoquant. Indicate the points on that isoquantd defined in part a and part b. What is the RTS along this isoquant? Explain why the RTS is the same at every point on the isoquant.arrow_forward
- A small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital Question If hiring labor for the winter costs $100/unit and a unit of capital costs $400, what is the best production method? What method should the company use if the cost of labor rises to $200/unit?arrow_forwardWe can describe inputs as either fixed or variable. Thinking about a company that assembles cars, which of the following would be an example of a fixed input that could not be changed in the short run? Group of answer choices A)The robots that help assemble the cars. B)The building where the assembly takes place. C)The electricity required to support the assembly activity. D)The employees that work for the company.arrow_forwardSuppose that Ann's budget for running her shop is $100. She pays her worker a wage of $20 and capital cost $10. Based on this information, Ann's equation for her isocost line isarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning