Economists assume that firms search for the cost-minimizing combination of inputs that will allow them to...
Economists assume that firms search for the cost-minimizing combination of inputs that will allow them to produce a given level of output. On what two factors does the cost-minimizing combination of inputs depend? The cost-minimizing combination of inputs depends on A. opportunity costs and implicit costs. B. marginal returns and returns to scale. C. fixed costs and variable costs. D. technology and the production function. E. technology and input prices.
Homework Answers
ANSWER:
The correct answer is option e that is technology and input prices as technology will determine how much output a firm will receive by employing a certain quantity of inputs and input prices will determine the total costs for each combination of inputs.
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Economists assume that firms search for the cost-minimizing
combination of inputs that will allow them to...
Consider a cost-minimizing firm that uses two inputs x, and x, to produce output y from...
Consider a cost-minimizing firm that uses two inputs x, and x, to produce output y from the production function y=x"X, where a >0 and B>0. The competitive input prices of x, and x, are given respectively as w, and wz. a) Find the firm's demand functions for inputs x, and xz. b) Find the firm's total cost, average cost, and marginal cost functions. c) Show that if a +B>1 then average cost is always greater than marginal cost.
1. According to the law of diminishing returns, the: a. total product of an input must...
1. According to the law of diminishing returns, the: a. total product of an input must eventually decline b. average produt of an input must always increase c. marginal product of an input must eventually decline d. marginal product of an input must eventually rise 2. An isocost line shows the: a. input combinations that can be purchased with a given outlay of funds b. costs of inputs needed to produce along an isoquant c. costs of inputs needed to...
3. (a) "A firm's cost- minimizing choice of inputs to produce a given output level depends...
3. (a) "A firm's cost- minimizing choice of inputs to produce a given output level depends on the relative cost ween its inputs in the production process. of the inputs and the extent to which the firm can substitute bet Discuss the above quote with the aid of a diagram. s $5 per hour for servers and $50 per hour to rent ovens and other (b) A fast food restaurant currently pay ine whether the restaurant is minimizing its cost...
QUESTION 4 Assuming each unit of variable inputs cost the same, marginal cost will increase as...
QUESTION 4 Assuming each unit of variable inputs cost the same, marginal cost will increase as output increases if O Variable cost is rising. Total cost is rising Marginal physical product is rising. Marginal physical product is falling QUESTION 5 In the short run, when a firm produces zero output, total cost equals: O fixed costs. variable costs O zero. O average total cost. QUESTIO Economic cost includes: O Only the value of resources used to produce a good for...
microeconomics 2.) Production, Costs and Industry Structure Firms normally seek the combination of inputs that offers...
microeconomics
2.) Production, Costs and Industry Structure Firms normally seek the combination of inputs that offers the least costly way to produce any given output. Is it possible for a firm to produce the same quantity of output in a variety of ways by substituting more of one input for less of another? If so, why would firms do so and how in doing so would firms engage in this economic behavior? Give one example of this economic behavior that...
produce 16000 units of output. What is the cost minimizing combination of capital and labor for...
produce 16000 units of output. What is the cost minimizing combination of capital and labor for this firm? What is it's minimized cost of producing 16000 units of output? 2.2 Problem 2 In a perfectly competitive market all firms (including potential entrants) have a total cost function given by TC(Q) = 100Q - QP + ', where Q is that firm's output. Therefore, each firm's average cost function is AC(Q) = 100-Q+ Qand each firm's marginal cost function is given...
A cost minimizing firm’s production function is Q=2KL. The price of labor, w, is currently $4,...
A cost minimizing firm’s production function is Q=2KL. The price of labor, w, is currently $4, and the price of capital, r, is currently $1. At the firm’s current level of output, it has total costs of $160. Input prices change such that the wage rate is now 8 times the rental rate. The firm adjusts its input combination, but leaves total output unchanged. Answer the questions below as you solve for the cost - minimizing input combination after the...
A farmer uses three inputs to produce vegetables: land, labor, and capital
A farmer uses three inputs to produce vegetables: land, labor, and capital. The production function for the farm exhibits diminishing marginal rate of technical substitution. a. In the short run the amount of land is fixed. Suppose the prices of capital and labor both increase by 5%. What happens to the cost-minimizing quantities of labor and capital for a given level of output? (Remember that there are three inputs, one of which is fixed). b. Suppose only the cost of labor goes...
Most firms will eventually face increasing average costs as they try to increase output. The firm...
Most firms will eventually face increasing average costs as they try to increase output. The firm finds that each extra unit of output requires more inputs to produce than previous units, an outcome described as the law of diminishing marginal returns. The law of diminishing marginal returns states that as you try to expand output, your marginal productivity (the extra output associated with extra inputs) eventually declines The law of diminishing returns can limit the economies of scale and economies...
Consider a production function of three inputs, labor, capital, and materials, given by Q= LKM
Consider a production function of three inputs, labor, capital, and materials, given by Q= LKM. The marginal products associated with this production function are as follows: MPL = KM, MPk = LM, and MPM = LK. Let w = 5, r = 1, and m = 2, where m is the price per unit of materials. (a) Suppose that the firm is required to produce Q units of output. Show how the cost-minimizing quantity of labor depends on the quantity Q....
Consider a cost-minimizing firm that uses two inputs x, and x, to produce output y from the production function y=x"X, where a >0 and B>0. The competitive input prices of x, and x, are given respectively as w, and wz. a) Find the firm's demand functions for inputs x, and xz. b) Find the firm's total cost, average cost, and marginal cost functions. c) Show that if a +B>1 then average cost is always greater than marginal cost.
3. (a) "A firm's cost- minimizing choice of inputs to produce a given output level depends on the relative cost ween its inputs in the production process. of the inputs and the extent to which the firm can substitute bet Discuss the above quote with the aid of a diagram. s $5 per hour for servers and $50 per hour to rent ovens and other (b) A fast food restaurant currently pay ine whether the restaurant is minimizing its cost...
QUESTION 4 Assuming each unit of variable inputs cost the same, marginal cost will increase as output increases if O Variable cost is rising. Total cost is rising Marginal physical product is rising. Marginal physical product is falling QUESTION 5 In the short run, when a firm produces zero output, total cost equals: O fixed costs. variable costs O zero. O average total cost. QUESTIO Economic cost includes: O Only the value of resources used to produce a good for...
microeconomics
2.) Production, Costs and Industry Structure Firms normally seek the combination of inputs that offers the least costly way to produce any given output. Is it possible for a firm to produce the same quantity of output in a variety of ways by substituting more of one input for less of another? If so, why would firms do so and how in doing so would firms engage in this economic behavior? Give one example of this economic behavior that...
produce 16000 units of output. What is the cost minimizing combination of capital and labor for this firm? What is it's minimized cost of producing 16000 units of output? 2.2 Problem 2 In a perfectly competitive market all firms (including potential entrants) have a total cost function given by TC(Q) = 100Q - QP + ', where Q is that firm's output. Therefore, each firm's average cost function is AC(Q) = 100-Q+ Qand each firm's marginal cost function is given...
Most firms will eventually face increasing average costs as they try to increase output. The firm finds that each extra unit of output requires more inputs to produce than previous units, an outcome described as the law of diminishing marginal returns. The law of diminishing marginal returns states that as you try to expand output, your marginal productivity (the extra output associated with extra inputs) eventually declines The law of diminishing returns can limit the economies of scale and economies...
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