Question

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 and markets where capital is
procured, suppose that Mitsubishi determines that its marginal
productivity of capital is 0.7 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
selling price of Mitsubishi’s smallest car is ¥1,200,000. Determine
the rate at which Mitsubishi can rent capital and the marginal
productivity of labor at its new targeted level of output.

**Instruction:** Enter your response for marginal
productivity of labor rounded to four decimal places.

Rental rate of capital: ¥ ________

Marginal productivity of labor: __________

To minimize costs Mitsubishi should hire capital and labor until the marginal rate of technical substitution reaches what proportion?

**Instruction:** Enter your response rounded to
four decimal places.

__________

Answer #1

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 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...

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.

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...

Answer these MC:
Use the following information to answer the five questions that
follow. A firm has the following production function Q=10LK with
the corresponding technical rate of substitution K/L. The wage rate
of labor is $10 and the rental price of capital is $100.
24. Suppose the firm has 10 units of capital. In the short run,
the cost of producing Q=400 is a) 40 b) 400 c) 1000 d) 1040
25. Suppose the firm wishes to produce Q=400...

1) Consider a firm that uses only capital and labor. In the
short-run the firm:
A. Will never face diminishing returns to labor
B. Faces diminishing returns to labor because capital cannot be
changed
C. Faces increasing returns to labor because capital is
variable
D.Faces diminishing returns to capital because labor can be
changed
2) Tim started a lawn mowing business during summer break using
his family's lawn mower, which statement best explains the shape of
the production function?
A....

Exploring Innovation in Action Power to the People – Lifeline
Energy Trevor Baylis was quite a swimmer in his youth, representing
Britain at the age of 15. So it wasn’t entirely surprising that he
ended up working for a swimming pool firm in Surrey before setting
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