Question

Question 5 (1 point)

the production function is given by F(L) = 6L^2/3. Suppose that the cost per unit of labor is $12 and the price of output is 12, how many units of labor will the firm hire?

Question 5 options:

	32
	192
	64
	128
	None of the above.

Question 6 (1 point)

A firm has the production function f(X, Y) = X^3/4Y^1/4, where X is the amount of factor x used and Y is the amount of factor y used. On a diagram we put X on the horizontal axis and Y on the vertical axis. We draw some isoquants. Now we draw a straight line on the graph and we notice that wherever this line meets an isoquant, the isoquant has a slope of -9. The straight line we drew

Question 6 options:

	is horizontal.
	is a ray through the origin with slope 3.
	is vertical.
	is a ray through the origin with slope 4.
	has a negative slope.

Answer 1

Answer:

Question 1]

The firm hires up to when Wage = MRPL where MRPL = MPL* P

MPL = change in output/change in labor = 6x2/3/L^1/3 = 4/L^1/3

12x4/L^1/3 = 12

L = 64

64 units of labor will the firm hire.

Hence correct option: C] 64 units

Question2]

The production function is “Q=X^3/4*Y^1/4”, => MPx = (3/4)* X^(-1/4)*Y^1/4, and MPy = (1/4)* X^(3/4)*Y^(-3/4), => MRTS = MPx/MPy.

MRTS = [(3/4)* X^(-1/4)*Y^1/4] / [(1/4)*X^(3/4)*Y^(-3/4)].

MRTS = 3*Y/X. Now, the straight line cut the isoquant where the slope is “(-9)”.

At that point “MRTS=9”, = 3Y/X=9, => Y=3*X, = dY/dX=3, = the straight line is the ray though the origin with slope “3”,

Hence correct option is B] is a ray through the origin with slope 3