AS.180.350 Lecture Notes - Lecture 11: Isocost, Substitute Good, Production Function

203 views2 pages

pearmule696

5 Dec 2017

School

JHU

Department

AS Economics, AS Dean's Teaching Fellowship Courses

Course

AS.180.350

Professor

Husain

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Labor demand: consider the long-run employment decision of a perfectly competitive firm, and imagine this firm facing a monthly salary of ,550 per worker and monthly capital costs of. Give an interpretation of this condition. (c) sketch the solution in a capital/labor diagram. Then suppose that the monthly salary decreases to ,040 per worker. Why: suppose the hourly wage is and the price of each unit of capital is . The price of output is constant at per unit. How much profit will the firm earn: suppose there are two inputs in the production function, labor and capital, and these two inputs are perfect substitutes. The existing technology permits 1 machine to do the work of 3 persons. The firm wants to produce 100 units of output. Suppose the price of capital is per machine per week.

Related Questions

Ben and Geri have changed their production methods and are now producing ice cream according to the production function,

Y=KL,

1. The price of a machine is R= 2 dollars and a laborer costs W= 1 dollar, the expenditure level E=$8, Determine the slope of the iso-expenditure curve

2. By setting the MRTS equal to the slope of the iso-expenditure curve, determine the mascot-minimizing capital-labor ratio (K/L) with R=2 and W=1. Given that the firm wants to produce Y=8 units of output, what is the optimal level of capita and labor for the firm? what is the cost-minimizing level of expenditure E when the firm produces Y=8 pints of ice cream?

3.Suppose the price of a laborer goes up to W=2. What are the new cost-minimizing levels of capital and labor given that Ben and Geri are still producing Y=8 pints of ice cream? What is the new cost-minimizing level of expenditure

sapphireeagle429

Please, provide all the steps... I need to be able to do this on my own after you show me. Thank you!

A firm produces output according to the production function:

Q = F(K,L) = 4K + 8L.

a. How much output is produced when K = 2 and L = 3?

b. If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost-minimizing input mix for producing 32 units of output?

Capital: ?
Labor: ?

c. If the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour, what is the cost-minimizing input mix for producing 32 units of output?

Capital: ?
Labor: ?

A cost-minimizing firm has the following short-run production function:
Q=f (L,K)=72L+5L²-0.2L³

a) Briefly explain why this is a short-run production function.

b) At what level of employment would be diminishing returns set in for the variable input?

c) Fin the levels of employment that define stage two in the production process.

d)If the market-determined real wage rate is $20 determine the amount of labor a cost-minimizing firm would hire in order to minimize the total cost of production.

2) a) Briefly explain the concept of "Return to scale". What form of "Return toScale" does the following production function exhibit? Explain

b) Q=f(L,K)=L^0.3 K^0.7

Suppose a cost-minimizing firm wishes to change its scale of production and needs to know the combination of labor and capital to employ. If the first's total cost outlay is $14. Fin this combination using the information below and given that the prices of labor and capita are $1 and $3 per unit respectively.

Q= 0 1 2 3 4 5 6 7 8

TPI=0 11 20 28 35 41 45 46 46.5

TPK=0 24 45 63 78 87 93 96 97

where TPI AND TPK represent the total product of labor and total product of capital respectively.

3) Given the demand and supply schedules for semiconductors in a perfectly competitive market:

Q_d=60-10P+0.5I, Q_s=-10+4P-2C

Where I=average income of the demanders of this production

C=unit cost of the inputs used in the production of this commodity.

a) Find the expression for equilibrium price and equilibrium quantity transcended in this market.

b)Find the initial equilibrium and equilibrium quantity ifI=1000 and C=20

c) Determine the impact of an increase in income from 1000 to1200 on the initial equilibrium values.

d) Assume that an improvement in the technology of producing this commodity results in an increase in supply by a factor of 5, how will this development affect the initial equilibrium values?0

roseant382

AS.180.350 Lecture Notes - Lecture 11: Isocost, Substitute Good, Production Function

Document Summary

Get access

Related Documents

AS.180.350 Study Guide - Midterm Guide: Price Elasticity Of Demand, Procyclical And Countercyclical, Market Failure

ECO101H1 Chapter Notes - Chapter 4: European Route E40, Isocost, Isoquant

ECO101H1 Chapter Notes - Chapter 4: European Route E40, Isocost, Isoquant

Related Questions