3. Hurley owns a restaurant. To operate the store, he needs to hire labor (L) and...
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...
11. Consider the production function: f(K,L)=K+L. Let w and r 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. (b) Find the profit maximizing output level and the profit function. 12. Consider a firm with production function f(K,L) = K +L. (a) Suppose that capital level is currently fixed at K = 10. Find the short term production cost function for...
The production of Florida strawberries uses two inputs: labor (L) and capital (K). The following production function describes how these inputs are combined to produce bushels of oranges. f(L,K) = 5(1/2 + 3K1/2 1) Determine what kind of returns to scale this production function exhibits (HINT: labor is the "x" variable - the one that goes on the horizontal axis). 2) What is the formula for that kind of returns to scale? (HINT: use f(L,K)) 3) What is the general...
4. Dan needs to hire workers and use oven hours to cook and serve para. The production function is F(LK) 60VLVK, where Lis the hour of labor input and K is the hour of oven usage. Note that the marginal product of labor is 30VK/VL and the marginal product of capital is 30VL/VK. Suppose the cost of labor is given to be $10 per hour and the cost of capital is $10 per hour. In the long run, all inputs...
A firm produces according to the following production function: Q = K^.5L^.5 where Q = units of output, K = units of capital, and L = units of labor. Suppose that inthe short run K = 100. Moreover, wage of labor is W = 5 and price of the product is P = 10. What are the optimal units of labor?
Consider a firm using two inputs; capital (K) and labor (L) in production. The firm's production technology is characterized by the following production function: Q = F(K, L) = 40K L In the short run (SR), the quantity of the capital (K) that the firm uses is fixed at K = 10 whereas the quantity of the labor input can be varied. Price of labor is $4,000 per worker and the price of capital is $2,000 per capital. (PL=$4,000 and...
4. A company produces economic analysis reports using hours of labor (L) and computers (K). The production function is ? = 2?√? Initially, in the short run, they have just 1 computer (K = 1). The wage is $20 per hour, and the cost of capital is $10. a. Derive short run total cost and short run average costs curves, with costs as a function of q. Do these costs curves exhibit economies or diseconomies of scale? Explain. (5) b....
Problem #3: Long-Run Labor Demand and Factor Substitutability Suppose there are two inputs in the production function, labor (L) and capital (K), which can be combined to produce Y units of output according to the following production function: 7. Suppose the firm can choose whatever combination of capital (K) and labor (L) it wants to produce 600 units. Suppose the price of capital is S1,000 per machine per week. What combination of inputs (K and L) will the firm use...
Consider an economy with the production function L^(1/3)a) Derive the Labor demand Curveb) If Labor supply curve is L^s= (w/p), calculate the equilibrium levels of real wage, labor and output.c) Assume M^s= 45 and k=3 . What is the equation of the aggregate demand curve for this example? What is the price level? What is the wage?
2. To produce 18 units of output a firm can hire either 9 workers or 3 machines. a. Let L denote workers and K denote machines. Write down a production function that represents this firm's production technology. (2 points) b. Let w denote the wage rate and r denote the rental rate of capital. Suppose wir = 0.4. Derive the firm's long run factor demand functions for labor and capital and the firm's long run cost function. (4 points) C....
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