Question

Suppose QF = min (LF/2 , KF), QC = min (Kc/2, LC), L = L* =...

Suppose QF = min (LF/2 , KF), QC = min (Kc/2, LC), L = L* = K = 1 and K* = 2

Which sector is labor intensive?

The answer is F, because LF / KF = 2 > 1/2 = LC / KC

How can I get the answer?


Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

As the production functions are L-shaped, the equilibrium/optimal solution will be at the corners of those L-curves, irrespective of the slope of isocost line. The corresponding graphs are also shown.

For the production function be , the corners will be at where or .

For the production function , the corners will be at where or .

Hence, sector F is labor intensive as the capital labor ratio is less there.

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
Consider our usual setting with two goods (food and clothing) and two inputs (capital and labor)....
Consider our usual setting with two goods (food and clothing) and two inputs (capital and labor). Units of labor and capital respectively needed to produce one unit of food are given by LF = 4, KF = 1, meaning that you need 4 units of labor and 1 unit of capital to produce 1 unit of food. The input requirements to produce one unit of clothing are given by LC = 1, KC = 2. Denote LC and KC as...
Imagine an economy makes only clothes (QC) and food (QF) and has two inputs of production:...
Imagine an economy makes only clothes (QC) and food (QF) and has two inputs of production: Labor (L) and Capital (K). It takes 4 units of capital and 1 unit of labor to make one unit of clothing. It takes 1 unit of capital and 1 unit of labor to make one unit of food. There is no substitutability between the two inputs. Hint: the total cost of production, TC, is equal to the wL+rK. You can think of L...
) Consider Home produces computers(C) and food(F) using capital(C) and labor(L). The unit factor requirements are...
) Consider Home produces computers(C) and food(F) using capital(C) and labor(L). The unit factor requirements are fixed and given by: aLC = 2, aKC = 6, aLF = 3, aKF = 4. The total labor supply is 900 and the total capital stock is 1,500. (1 point) a. Which good is relatively labor intensive? Which good is relatively capital intensive? (2 points) b. Derive and draw the PPF of this country. At which point on the PPF are both factors...
4. Suppose a small oil drill has the following production function F(K,L) = min(4K,L) where every...
4. Suppose a small oil drill has the following production function F(K,L) = min(4K,L) where every drill (captial unit) takes 4 people to operate. Output is measured in barrels. (a) Suppose there are 10 drills in the oil field. How many workers are needed to produce 40 barrels of oil (q=40)? (b) Graph the isoquant curves that represent q=20, q=40, and q=60. (c) Setup the cost minimization problem where labor and capital are flexible. Then find the cost function if...
Suppose two countries, Farmland and Techland, use only capital and labor to produce two goods, Grain...
Suppose two countries, Farmland and Techland, use only capital and labor to produce two goods, Grain (G) and Cars (C). Farmland has 2,050 units of capital and 916 units of labor, and Techland has 816 units of capital and 270 units of labor. In Techland, there are 366 units of capital and 135 units of labor employed in the Grain industry. In Farmland, there are 926 units of capital and 618 units of labor employed in the Grain industry. A.    ...
Bonus Question. Suppose the production function for a firrm is Q(K,L) = K1/2L1/2, so the marginal...
Bonus Question. Suppose the production function for a firrm is Q(K,L) = K1/2L1/2, so the marginal product of labor is MPL = 1 2 K1/2L−1/2 and the marginal product of capital is MPK = 1 2 K−1/2L1/2. a) Find the equation of the isoquant for Q = 1. That is, when Q = 1, find L as a function of K or K as a function of L to obtain an equation for the isoquant. b) Find K1, K2, L3,...
Suppose a monopolist has a production function given by Q = (L^1/2)/(K^1/2). Therefore, MPL =( k^1/2)...
Suppose a monopolist has a production function given by Q = (L^1/2)/(K^1/2). Therefore, MPL =( k^1/2) / 2(L^1/2) , and MPK =(L^1/2) / 2(k ^1/2)The monopolist can purchase labor, L at a price w = 16, and capital, K at a price of r = 9. The demand curve facing the monopolist is P = 360 – 2Q. a) (8 points) What is the monopolist’s total cost function? b) (4 points) How much output should the monopolist produce in order...
Suppose an agricultural firm has the production function: f(l; k; a) = l^(1/4) * k^(1/4) *...
Suppose an agricultural firm has the production function: f(l; k; a) = l^(1/4) * k^(1/4) * a^(1/4) where the price of labor is w, the price of capital is r and acreage (a) has price s. (a) Verify that this is a valid production function. (b) Solve the rm's cost minimization problem for the conditional input demands, cost function, average cost function, and marginal cost function. (c) Suppose that there was a tax on one or more inputs. For each...
1. Suppose a short-run production function is described as Q = 2L – (1/800)L^2 where L...
1. Suppose a short-run production function is described as Q = 2L – (1/800)L^2 where L is the number of labors used each hour. The firm’s cost of hiring (additional) labor is $20 per hour, which includes all labor costs. The finished product is sold at a constant price of $40 per unit of Q. a. How many labor units (L) should the firm employ per hour b. Given your answer in a, what is the output (Q) per hour...
Suppose the final goods production function is fixed-proportion, Q = f(E, L) = min{E,L}, where Q...
Suppose the final goods production function is fixed-proportion, Q = f(E, L) = min{E,L}, where Q is output level, E is energy input and L is the labor in- put. Let m be the marginal cost of energy per unit and w be the price of labor per unit. Suppose the demand function for final good is P = 1 - Q a). (10) Suppose energy and final good are produced by two different firms. Derive the cost function of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT