Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

Theory of Production:

problem 1: Suppose a firm’s budget were large enough to employ 100 units of either labor or capital, the cost of a unit of labor being the same as a unit of capital. The production function is X = KL . Given that output must be at least 20, what is the maximum number of people the firm could employ?

problem 2: The production function of a small shop that frames pictures is Q = 5 √LK where Q is the number of pictures framed per day, L is labor hours and K is the machine hours. Suppose 9 labor hours and 9 machine hours, are used every day, what is the maximum number of pictures that can be framed in a day? find out the marginal product of labor when 9 labor hours are used each day together with 9 machine hours. Suppose the firm doubles both the amount of labor and machine hours used per day, find out the increase in output. Comment on the returns to scale in the operation.

problem 3: Suppose you are an efficient expert hired by a manufacturing firm that uses two inputs, labor (L) and capital (K). The firm produces and sells a given output. You have the following information: PL = Rs 4, PK = Rs 100, MPL = Rs 4, MPK = Rs 40.

a) Is the firm operating efficiently? Why or Why not?

b) What should the firm do?
 
problem 4: Suppose that in an isoquant mapping, you should consider three isoquants with 1000, 2000 & 3000 units of output. The price of capital is Rs 2 a unit, and the price of labor is Rs 1 per unit.

a) Construct an expansion path.

b) How many units of each input are used to produce each level of output efficiently?

c) What is the minimum cost of producing each level of output?

d) Answer each problem under the assumption that the price of labor is now Rs 2 a unit and the price of capital is Re 1 a unit.
 
problem 5: The production function of the personal computers for DISK Company is given by Q = 10 √KL where Q is the number of computers produced per day, K s the hours of machine time, and L is hours of labor input. Disk’s competitor, FLOPPY Company is using the production function Q = 10 K.6 L.4 .

a) If both companies use equal amounts of capital and labor, which will generate more output?

b) Assume that capital is 9 machine hours, but labor is unlimited in supply. In which company is the marginal product of labor the greater? describe.
 
Theory of Cost:
 
problem 6: A firm producing hockey sticks has a production function given by X = 2 √KL In the short-run, the firm’s amount of capital equipment is fixed at K = 1000. The rental rate for capital (PK) is PK = v = Re 1.00; and the wage rate for L is PL = w = Rs 4.00.

a) find out the firm’s short-run total cost curve. find out the short-run average cost curve.

b) What is the firms short-run marginal cost function? What are the STC, SATC & SMC for the firm if it produces 25 hockey sticks?
 
problem 7: Assume that input prices are constant at r = 1, w = 1, with technology which consists of 5 processes having the following properties:

25_input prices.jpg

A producer can purchase labor without limit, but can purchase machine-hour only up to a total of 75. find out

a) The producer’s total and average cost of producing 100, 200, 300, 400 and 500 tons.
b) At what output levels will marginal cost change?
c) Give the marginal costs and output ranges over which each level of marginal cost is relevant.
 
problem 8: A firm is employing 100 hours of labor and 50 tons of cement to produce 500 blocks. Labor costs Rs 4 per hour and cement costs Rs 12 per ton. For the quantities employed MPL = 3 and MPC = 2. Show this situation in an isoquant-isocost diagram. describe and show in the diagram, how the firm can produce the same output at a lower total cost.
 
problem 9: If the marginal product of L is MPL = 10K – L and the marginal product of K is MPK = 10L – K, then what is the maximum possible output when the total amount that can be spent on K and L is Rs 1000 and the price of K is Rs 5 and the price of L is Rs 5.

problem 10: Is a firm minimizing its costs, if the marginal product of labor is six, the marginal product of capital is five, the wage rate is Rs 2.00 and the interest on capital is Rs 1.00? If not what must the firm do to minimize its costs?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91189

Have any Question? 


Related Questions in Microeconomics

Question 1which of the following has not been identified as

Question 1 Which of the following has NOT been identified as a basic consumer right? Consumers have a right to safe products. Consumers have a right to collude. Consumers have a right to be informed about a product. Cons ...

Feeding america final milestonein this assignment you will

Feeding America Final milestone In this assignment, you will demonstrate your mastery of the following course outcomes: - Evaluate management strategies and organizational structures of not-for-profit organizations for t ...

Assignmentoverviewthe incidence of fraud in the news has

Assignment Overview The incidence of fraud in the news has become more common in recent years. As the accounting profession becomes more aware of fraud schemes, it seems that the criminals who perpetrate them have become ...

Problem -the table below gives the income of each of four

Problem - The Table below gives the income of each of four individuals who are in a region. Calculate and plot the Lorenz curve and calculate the Gini coefficient for this economy. individual income 1 100 2 200 3 300 4 4 ...

Fiscal policy modulewhich has a larger effect on aggregate

Fiscal Policy Module Which has a larger effect on aggregate demand: an increase in government expenditure or an equal-sized decrease in taxes? Explain your answer. To eliminate a recessionary gap, which fiscal policy sho ...

Assignment 1 -i watch the videos on demand and supplythere

Assignment 1 - I) Watch the videos on Demand and Supply There are 5 changes in Demand that shift the demand curve to the right or left.  They are Change in Tastes and Preferences Change in Income Change in Population Cha ...

Economic term paperempirical project the research project

Economic Term Paper Empirical Project The research project should be about 10 pages and should explain your data collection, model, and findings. The project (due by the final exam date) is worth 30% of your final grade. ...

Problem setthis problem set is due on monday october 24th

Problem Set This problem set is due on Monday, October 24th in class. Consider the specific factors model (2 goods, 3 factors, where labor is the flexible factor) for a given small country with the following Cobb-Douglas ...

Implicit and explicit costs economic problemsproblem achoco

Implicit and Explicit Costs: Economic Problems Problem A Choco Delite is a manufacturer of fine chocolates. Its monthly rental expense is $1,000,000. It also has $2 million in fixed labor costs. Its marginal costs are $. ...

Instruction please answer all questions all questions carry

Instruction: Please answer ALL questions. All questions carry equal marks. Please do not write over 2000 words for the entire assignment. 1. a. Using the graph shown, analyze the effect a $300 price ceiling would have on ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen