
1. Suppose the production function is given by Q = LK, where MPL = K and...
1. Suppose the production function is given by Q = LK, where MPL = K and MPK - L. The level of output Q = 100 and both wage and interest rates are equal to one, so that war- a) Given that the wage increases to 4. determine the elasticity of demand for labour at the new wage. Indicate whether the wage bill will increase or decrease as wage increases to 6. b) Find the linear demand function for labour...
A firm has the production function Q= 4LK. The marginal products are given by MPL = 4K and MPK= 4L. Suppose that the prices of labour and capital are given by w and r. Solve for the quantities of L and K that minimize the cost of producing Q units of output. Provide an expression for the long run total cost function. What returns to scale are exhibited by this production function? What economies of scale are exhibited? Show the...
Acme produces anvils using labor (L) and capital (K) according to the production function Q= f(L,K)=LK with associated marginal products MPL=K, MPK =L. The price of labor is w=2 and the price of capital is r=1. Does Acme's production function for anvils exhibit increasing, constant or decreasing returns to scale? Justify your answer
Suppose the firm's production function is given by q= F(K, L)= K2L with MPL=K2, MPK=2KL The price per unit of capital is 10 and the price per unit of labor is 5. Find the cost minimizing quantity of labor to produce 500,000 units of output. Please round to the closest integer.
A firm’s production technology is given by the production function q 0.25 LK where L represents labor hours, K machine hours and q the amount of output. The market wage and rental rates are, w= $16 and r = $256. The firm is operating in the long run where it can adjust both inputs. Suppose that the firm currently is using ten labor hours for each machine hour. Is it minimizing its long run total cost? If so why...
A firm’s production technology is given by the production function q = 0.25 LK where L represents labor hours, K machine hours and q the amount of output. The market wage and rental rates are, w= $16 and r = $256. The firm is operating in the long run where it can adjust both inputs. (a) Suppose that the firm currently is using ten labor hours for each machine hour. Is it minimizing its long run total cost? If so...
4. Your production function is Q = LK. The wage for L is w and the rental rate for K is r. You need to produce Q units of output. (a) What is your total cost equation? (b) What is your output constraint? (c) Find the Marginal Rate of Technical Substitution (MRTS) for your production function. (d) In general (for any values of w and r), what relationship must hold between L and K at the cost minimizing bundle? (e)...
Suppose that a firm’s production function is given by Q = KL + K, with MPK = L + 1 and MPL = K. At point A, the firm uses K = 3 units of capital and L = 5 units of labor. At point B, along the same isoquant, the firm would only use 1 unit of capital. a) Calculate how much labor is required at point B. b) calculate the elasticity of substitution between A and B. Does...
QUESTION 5 The marginal product for labor is given (MP) = 3 – 0.02*L; price of the product is $100 and wage = 200. Based on information above, the marginal product of labor at the optimal level of employment is $3 $2 $1.5 $1 2 points QUESTION 6 If the labor elasticity of output is 0.5 and the capital elasticity of output is 0.9, then the production function exhibits constant returns to scale. economies of scale. diseconomies of scale. diminishing...
The production function of the Auto parts firm is given by Q-5L-L, where Q is the units of output and L is the number of labor hours. Each output sells for 100 dollars per unit. The human resources manager estimates that the marginal cost of hiring an extra worker is 50 dollars. How many labor hours should this firm hire? Hint: MPL=5-2 L 1) 2) A frim's production function is given by Q(L)-6L, where Q measures output and L is...