Output price rises for an industry that uses both labor and capital in producing a good....
Output price rises for an industry that uses both labor and capital in producing a good. Labor can adjust in the short run (and long run), while capital can adjust only in the long run. Show the short-run and long-run output supply functions for this industry
Homework Answers
The short run supply curve of an industry is the horizontal summation of the individual firms short run supply curves.
The long run industry supply curve is derived from the short run market supply curves.
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Output price rises for an industry that uses both labor and
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A firm uses two types of inputs, labor (L) and capital (K), to produce an output,...
A firm uses two types of inputs, labor (L) and capital (K), to produce an output, which is sold in a perfectly competitive market. The production function is given by y = f(L, K) = L 1 6 K 1 6 for all L, K ≥ 0. The price of labor is w > 0 and the price of capital is 1. Each unit of the output is sold at price p > 0. First, we consider the short-run decision...
5. Output price and supply in the short and long run Aa Aa E Consider a firm that is originally producing along the iso...
5. Output price and supply in the short and long run Aa Aa E Consider a firm that is originally producing along the isoquant corresponding to 800 units of output using the cost-minimizing bundle of labor and capital given by point A. The current price of output is $30. CAPITAL NsOogst1 Isocost2 LO IQ (Q=800) 19(Q=400) IQ (Q=150) LABOR Now suppose the price of output falls from $30 to $20, shifting the isocost curve from Isocost1 to Isocost2. This will...
A firm uses capital and labor in its production process. Capital is fixed in the short...
A firm uses capital and labor in its production process. Capital is fixed in the short run while labor is variable. Assume that the firm has acquired the optimal quantity of capital for the production of 100 units of output. Using typically shaped isoquants and isocost lines, demonstrate that the cost to the firm of increasing output to 200 units will be greater in the short run than in the long run. Identify the short-run expansion path and the long-run...
consider an industry that uses capital, K and labor, L to produce output, X, according to...
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2.(15 points) A firm uses capital and labor in its production process. Capital is fixed in...
2.(15 points) A firm uses capital and labor in its production process. Capital is fixed in the short run while labor is variable. Assume that the firm has acquired the optimal quantity of capital for the production of 100 units of output. Using typically shaped isoquants and isocost lines, demonstrate that the cost to the firm of increasing output to 200 units will be greater in the short run than in the long run. Identify the short-run expansion path and...
D Question 9 1 pts The price of your output rises, so you hire more labor, but are unable to increase your plant si...
D Question 9 1 pts The price of your output rises, so you hire more labor, but are unable to increase your plant size anytime soon. You are in which time period of production? The long run. The period of perfectly elastic supply, The short run. The market period.
1. Suppose a production function is given by FIK... - KL? the price of capital is...
1. Suppose a production function is given by FIK... - KL? the price of capital is $10 and the price of labor $15. Find the combination of labor and capital minimizes the cost of producing 1296 units in the following two scenarios 2. In the short run the amount of capital is set and is equal to K-36. 1 In the long run you are able to optimally choose the amount of labor and capital Show the isoquant and isocosts...
10. Consider the production function: f(KL)=K L. Let wandr denote the price of labor and capital,...
10. Consider the production function: f(KL)=K L. Let wandr denote the price of labor and capital, and let p denote the price of the output good. (a) Find the cost minimizing input bundle and the cost function as a function of w., and q. (b) Find the profit maximizing output level and the profit as a function of w, r, and p. 11. Consider the production function: f(KL)=K+L. Let w and r denote the price of labor and capital, and...
A firm discovers that when it uses K units of capital and L units of labor,...
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[Short-Run Production] Suppose that a firm is producing in the short run with output given by:...
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5. Output price and supply in the short and long run Aa Aa E Consider a firm that is originally producing along the isoquant corresponding to 800 units of output using the cost-minimizing bundle of labor and capital given by point A. The current price of output is $30. CAPITAL NsOogst1 Isocost2 LO IQ (Q=800) 19(Q=400) IQ (Q=150) LABOR Now suppose the price of output falls from $30 to $20, shifting the isocost curve from Isocost1 to Isocost2. This will...
2.(15 points) A firm uses capital and labor in its production process. Capital is fixed in the short run while labor is variable. Assume that the firm has acquired the optimal quantity of capital for the production of 100 units of output. Using typically shaped isoquants and isocost lines, demonstrate that the cost to the firm of increasing output to 200 units will be greater in the short run than in the long run. Identify the short-run expansion path and...
D Question 9 1 pts The price of your output rises, so you hire more labor, but are unable to increase your plant size anytime soon. You are in which time period of production? The long run. The period of perfectly elastic supply, The short run. The market period.
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