Question

if the cost of production is $2000, the rent of capital is r=$40, and the wage...

if the cost of production is $2000, the rent of capital is r=$40, and the wage of labor or is w=$50, draw the isocost line.

(*** Draw each case below on a separate graph.***)

- If the cost of production increases to $5000, redraw the isocost line.

- Start from the initial situation. Now, if the rent of the capital declines to $ 20, redraw the isocost line.

- Start from the initial situation. Now, if the wage of labor increases to $100, redraw the isocost line.

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
Suppose a firm’s production function is given by Q = L 1/2 , K 1/2. a)...
Suppose a firm’s production function is given by Q = L 1/2 , K 1/2. a)   Suppose the firm has a fixed cost FC=6, the price of labor is w = 64 and the price of capital is r = 4. Derive the firm’s total cost function, TC(Q). b)   What is the firm’s marginal cost? c)   Graph the firm’s isoquant for Q = 20 units of output. On the same graph, sketch the firm’s isocost line associated with the total...
Suppose that the price of labor (w) is $ 6 and the price of capital (r)...
Suppose that the price of labor (w) is $ 6 and the price of capital (r) is $ 18. Assume the firm has a budget of $ 20,000 to spend on labor and capital. Also assume that the firm’s production function is Q = 4L.5 6K.5 . A. Write the equation for this firm’s isocost line. B. What is the optimal combination of inputs for this firm? Show your work. C.        At that input combination, how much output can this...
2. Suppose a firm is producing 200 widgets. The firm’s production function is Cobb- Douglas with...
2. Suppose a firm is producing 200 widgets. The firm’s production function is Cobb- Douglas with decreasing returns to scale. (This means we have normal, convex isoquants). The firm uses K’ units of capital and L’ units of labor. Initially, the input prices are w’ and r’. However, an exogenous shock in the labor market causes an increase in the wage rate, resulting in an increase in input prices from w’ to w’’ where w’<w’’. Using a graph (of isoquant...
3. A firm’s production function is Q=min(K, 3L ). Input prices a re as follows: w=$...
3. A firm’s production function is Q=min(K, 3L ). Input prices a re as follows: w=$ 2 and r=$1. On the optimal choice diagram below, draw the isoquant for Q=12. Calculate the optimal choice of K and L for this level of output as well as the total cost. Then, draw in (with a dotted line) the isocost line consistent with your Total Cost value. It won't let me copy the graph template but it is a simple graph with...
Given production function: Q=L3/5K1/5. Where L is labor, K is capital, w is wage rate, and...
Given production function: Q=L3/5K1/5. Where L is labor, K is capital, w is wage rate, and r is rental rate. What kinds of returns to scale does your firm face? Find cost minimizing level of L and K, and long run cost function.
2. A firm has production function Q = k^1/2L^1/2 and faces a wage for the labor...
2. A firm has production function Q = k^1/2L^1/2 and faces a wage for the labor input w = 1 and a rental price of capital r = 9 a. The policy of the Federal Reserve brings the rental price of capital to r = 4 Graph the change of the cost minimizing equlibrium explaining the type of substitution that is happening. b. Compute the new cost function. Suppose a monopoly and show graphically if after this change in the...
Suppose the firm's production function is Q = K 1/3L 2/3 . a. If the rental...
Suppose the firm's production function is Q = K 1/3L 2/3 . a. If the rental rate of capital R = $30 and the wage rate W = $40, what is the cost-minimizing capital-to-labor ratio? b. If the rental rate of capital R is $35 and the wage rate W is $70, how many units of labor and capital should the firm use to produce 12 units of output?
Given the production function Q=K2L2 and the price of capital and labor as r=4 and w=8,...
Given the production function Q=K2L2 and the price of capital and labor as r=4 and w=8, respectively, if the goal is Q=2500 find the level of capital (K) and labor (L) to minimize cost.
In this problem, you can assume all solutions are interior. Suppose the hourly wage is $20...
In this problem, you can assume all solutions are interior. Suppose the hourly wage is $20 and the price of each unit of capital is $20. The price of output is constant at $40 per unit. The production function is f(E,K) = E^1/6 K^1/2 (a) If the current capital stock is fixed at 36 units, how much labor should the firm use in the short run? How much profit will the firm earn? (b) How much labor and capital should...
A firm produces a product with labor and capital. Its production function is described by Q...
A firm produces a product with labor and capital. Its production function is described by Q = min(L, K). Let w and r be the prices of labor and capital, respectively. a) Find the equation for the firm’s long-run total cost curve as a function of quantity Q and input prices, w and r. b) Find the solution to the firm’s short-run cost minimization problem when capital is fixed at a quantity of 5 units (i.e., K = 5). Derive...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT