Question

Assume that a perfectly competitive firm uses capital and labor to produce lawn care services. Use...

Assume that a perfectly competitive firm uses capital and labor to produce lawn care services. Use an isoquant-isocost analysis and a second graph depicting marginal cost and demand to show the input substitution and output effects for a decrease in the capital rental rate (r). Describe the input substitution and output effects.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A firm uses capital and labor to produce output according to the production ? = 4√??...
A firm uses capital and labor to produce output according to the production ? = 4√?? (a) Find the marginal product of labor (MPL) and marginal product of capital (MPK). (b) If the wage w=$1/labor-hr. and the rental rate of capital r=$4/machine-hr., what is the least expensive way to produce 16 units of output? (c) What is the minimum cost of producing 16 units? (d) Show that for any level of output, q, the minimum cost of producing q is...
a. A firm uses only two inputs: capital (K) and labor (L).Currently, the firm’s choice of...
a. A firm uses only two inputs: capital (K) and labor (L).Currently, the firm’s choice of capital (K) and labor (L) are such that marginal product of capital is 80 and the marginal product of labor is 10. If one put Labor on the x-axis, derive the slope of the firm’s isoquant given the information above (include the formula you use to do this). b. The price of capital (Pk) is $40 and the price of labor (PL) is $20....
For a firm operating in a perfectly competitive labor market, but an imperfectly competitive output market,...
For a firm operating in a perfectly competitive labor market, but an imperfectly competitive output market, the short-run labor demand curve is downward sloping due to: A. the law of diminishing returns. B. the decrease in marginal revenue that occurs when output rises. C. both of the above are correct. D. None of the above is correct.
Consider a firm that used only two inputs, capital (K) and labor (L), to produce output....
Consider a firm that used only two inputs, capital (K) and labor (L), to produce output. The production function is given by: Q = 60L^(2/3)K^(1/3) . a.Find the returns to scale of this production function. b. Derive the Marginal Rate of Technical Substitutions (MRTS) between capital and labor. Does the law of diminishing MRTS hold? Why? Derive the equation for a sample isoquant (Q=120) and draw the isoquant. Be sure to label as many points as you can. c. Compute...
A pen maker uses labor and capital to produce their pens. They are both normal inputs...
A pen maker uses labor and capital to produce their pens. They are both normal inputs with prices w and r respectively. Initially workers were earning a wage of $10 per hour and capital was paying a rental rate of $8 per hour. If the input prices then changed to w=$7 and r=$6, what would be the substitution effect and scale effect? Would the firm employ more or less labor? more or less capital?
Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week....
Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he A) charges a higher price. B) charges a lower price. C) moves fewer than 22 lawns a week. D) moves more than 22 lawns a week. Quantity Total fixed cost, TFC (dollars) Total variable cost, TVC (dollars) 0 500 0 1 500 100 2 500 180 3 500 220...
A graph that shows all of the combinations of capital and labor that can be used...
A graph that shows all of the combinations of capital and labor that can be used to produce a given level output is which of the following? a. A budget line b. An indifference curve c. An isoquant d. An isocost line The least-cost method of production is shown at the point of tangency between ________ and the ________ isoquant on an isoquant diagram. a. indifference curve; highest b. budget line; highest c. budget line; lowest d. marginal cost curve;...
A firm purchases capital and labor in competitive markets at prices of r = 6 and...
A firm purchases capital and labor in competitive markets at prices of r = 6 and w = 4, respectively. WIth the firm's current input mix, MPK = 12 and MPL = 18. If the firm reduced its capital by 1, it would produce 12 fewer units. a) How much would the firm save in capital rental costs? b) How many units of labor would the firm need to add to replace the lost output? c) How much would the...
Assume that a profit maximizer firm uses only two inputs, labor (L) and capital (K), and...
Assume that a profit maximizer firm uses only two inputs, labor (L) and capital (K), and its production function is f(K,L) = K2 x L. Its MRTS of capital for labor (i.e., how many units of capital does he want to give up one unit of labor) is given by MRTS = MPL / MPK = K / (2L) a) Assume that this firm wants to spend $300 for the inputs (total cost of factors of production). The wage per...
Suppose Cool T-Shirts Co produces T-shirts and employs labor (L) and capital (K) in production. Suppose...
Suppose Cool T-Shirts Co produces T-shirts and employs labor (L) and capital (K) in production. Suppose production function for Cool T-Shirts Co is Q=K*L, and Cool T-Shirts Co wants to produce Q=625. Suppose marginal product of labor (MPL) and marginal product of capital (MPK) are as follows: MPL=K and MPK=L. Suppose Cool T-Shirts Co pays workers $10 per hour (w=$10) and interest rate on capital is $250 (r=250). What is the cost-minimizing input combination if Cool T-Shirts Co wants to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT