Question

Suppose that as part of the restructuring plan Ford conducts an analysis of how labor and...

Suppose that as part of the restructuring plan Ford conducts an analysis of how labor and capital are used in its production process. Prior to restructuring Ford’s marginal rate of technical substitution is 0.12 (in absolute value). To hire workers, suppose that Ford must pay the competitive hourly wage of $15. In the study of its production process and markets where capital is procured, suppose that Ford determines that its marginal productivity of capital is 0.6 small cars per hour at its new targeted level of output and that capital is procured in a highly competitive market. The same study indicates that the average rate at which Ford can rent capital is $5600. To minimize costs Ford should hire capital and labor until the marginal rate of technical substitution reaches what proportion? At this optimal level, what should be the productivity of labor?

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
According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an...
According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an attempt to reverse declining global sales. Suppose that as part of the restructuring plan Mitsubishi conducts an analysis of how labor and capital are used in its production process. Prior to restructuring Mitsubishi’s marginal rate of technical substitution is 0.12 (in absolute value). To hire workers, suppose that Mitsubishi must pay the competitive hourly wage of ¥1,800. In the study of its production process...
According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an...
According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an attempt to reverse declining global sales. Suppose that as part of the restructuring plan Mitsubishi conducts an analysis of how labor and capital are used in its production process. Prior to restructuring Mitsubishi’s marginal rate of technical substitution is 0.15 (in absolute value). To hire workers, suppose that Mitsubishi must pay the competitive hourly wage of ¥1,820. In the study of its production process...
Accoridng to The wall street jorunal , Mitsubishi Motoers recentaly annoucned a major restructiring plan in...
Accoridng to The wall street jorunal , Mitsubishi Motoers recentaly annoucned a major restructiring plan in an attempt to reverse declining global sales. Suppose that as part of the restructuring plan Mitsubishi conducts an analysisog how labor and capital are used in its production process. Prior to restucting Mitsubishi's marginal rate of technical substitution is 0.16(in absolute value). To hire workes , suppose Mitsubishi must pay the competitive hourly way of 1740. In the study of its production process and...
Suppose a competitive firm’s production function is Y= 20 L1/2 K1/3. L is Labor , K...
Suppose a competitive firm’s production function is Y= 20 L1/2 K1/3. L is Labor , K is capital and Y is output. a) (4) Find the marginal product of labor and capital. b) (4) What is Marginal Rate of technical Substitution of Labor for Capital? c) (2) Does this production function exhibit increasing, decreasing or constant returns to scale? Show your work.
(a) Suppose the marginal product of labor is 8 and the marginal product of capital is...
(a) Suppose the marginal product of labor is 8 and the marginal product of capital is 2. If the wage rate is $4 and the price of capital is $2, then in order to minimize costs should the firm hire more workers or rent more capital? Please explain. (b) Suppose the production function is given by Q = min{K, L}. How much output is produced when 10 units of labor and 9 units of capital are employed? Please explain.
Consider the following Cobb-Douglas production function: y(K,L) = 2K^(0.4)*L^(0.6), where K denotes the amount of capital...
Consider the following Cobb-Douglas production function: y(K,L) = 2K^(0.4)*L^(0.6), where K denotes the amount of capital and L denotes the amount of labour employed in the production process. a) Compute the marginal productivity of capital, the marginal productivity of labour, and the MRTS (marginal rate of technical substitution) between capital and labour. Let input prices be r for capital and w for labour. A representative firm seeks to minimize its cost of producing 100 units of output. b) By applying...
Suppose there are two inputs (Labor; Capital). If the MRTSL,K = 5 and the relative price...
Suppose there are two inputs (Labor; Capital). If the MRTSL,K = 5 and the relative price ratio is 6, then the firm should uses more labor and less capital the firm should uses less labor and more capital the firm should uses more labor and more capital the firm should uses less labor and less capital 2 points    QUESTION 35 The optimal level of labor in the short run is determined where: marginal product of labor is equal to...
Suppose in a particular production process that capital and labor are perfect substitutes so that three...
Suppose in a particular production process that capital and labor are perfect substitutes so that three units of labor can always be substituted for one unit of capital. If the price of capital is $4 per unit and the price of labor is $1 per unit, the firm should employ only capital to minimize the cost of producing its output level. a. True b. False
True/False 1. Suppose a firm can only vary the quantity of labor hired in the short...
True/False 1. Suppose a firm can only vary the quantity of labor hired in the short run. An increase in the cost of capital will increase the firm's marginal cost. 2. A horizontal demand curve for a firm implies that the firm is selling in a competitive market. 3. If a profit-maximizing firm finds that, at its current level of production, MR < MC, it will operate at a loss.
What is the correct alternative for each question? 1. Suppose there are two inputs for production,...
What is the correct alternative for each question? 1. Suppose there are two inputs for production, labor, and capital. The firm’s production process is defined by the following production function y = f (L, K). How do we interpret the firm’s marginal rate of technical substitution? a) How many units of capital the firm would have to give up in order to attain one more unit of labor, such that the firm maintains the same cost level b) How many...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT