5. The following shows a 200 series of isoquants for a firm 190 with the production...

 

Transcribed Image Text:

5. The following shows a 200 series of isoquants for a firm 190 with the production function 180 170 Q-KL, where K is the 160 amount of capital, L is the 150 amount of labor and Q is the 140 130 total output. 120 110 a. Label the isoquant that does not have a quantity by it with the appropriate quantity. That is, fill in the blank at Q= on the graph with a number. Show your work. *100 90 80 70 60 50 40 30 20 10 0 8 8 8 8 8 8 8 8 8 8 8 8 8 140 OST 160 170 180 190 200 Q=9000 Q=5000 Q= b. Does this firm experience increasing, decreasing, or constant retums to scale in the long run? How do you know? c. If r, the cost of a unit of capital, is $1/unit of capital, and w, the cost of labor, is S2/unit of capital, then, the long run cost minimizing combination of K and L for producing Q = 5000 is K and Land total costs at those levels of inputs are (Show any work you do). d. What is the average total cost of producing Q-50007 If the firm wants to increase its output to Q=9000 in the short run, they will use L and total costs at those levels of inputs are K and (Show any work you do). 5. The following shows a 200 series of isoquants for a firm 190 with the production function 180 170 Q-KL, where K is the 160 amount of capital, L is the 150 amount of labor and Q is the 140 130 total output. 120 110 a. Label the isoquant that does not have a quantity by it with the appropriate quantity. That is, fill in the blank at Q= on the graph with a number. Show your work. *100 90 80 70 60 50 40 30 20 10 0 8 8 8 8 8 8 8 8 8 8 8 8 8 140 OST 160 170 180 190 200 Q=9000 Q=5000 Q= b. Does this firm experience increasing, decreasing, or constant retums to scale in the long run? How do you know? c. If r, the cost of a unit of capital, is $1/unit of capital, and w, the cost of labor, is S2/unit of capital, then, the long run cost minimizing combination of K and L for producing Q = 5000 is K and Land total costs at those levels of inputs are (Show any work you do). d. What is the average total cost of producing Q-50007 If the firm wants to increase its output to Q=9000 in the short run, they will use L and total costs at those levels of inputs are K and (Show any work you do).

Answer rating: 100% (QA)

a The isoquant that ... View the full answer