Suppose a firm has two inputs: capital and labor. The following table shows how much labor...

 

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Suppose a firm has two inputs: capital and labor. The following table shows how much labor the firm needs to produce 200, 400, or 600 units of output if it has 1, 2, 3, or 4 units of capital: Labor Input (Hours) Quantity Produced With 1 Unit of Capital With 2 Units of Capital With 3 Units of Capital With 4 Units of Capital 200 60 30 10 5 400 90 50 35 25 600 100 65 45 30 On the following diagram, plot this firm's production indifference curves for 400 and 600 units of output. Specifically, use the purple points (diamond symbol) to plot the production indifference curve corresponding to 400 units of output; use the green points (triangle symbol) to plot the production indifference curve corresponding to 600 units of output. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Points will snap to the quantities of labor. CAPITAL (Units of capital) Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Points will snap to the quantities of labor. 1 5 0 0 10 20 30 40 50 60 70 80 90 100 LABOR (Hours of labor) Production Indifference Curve (Q= 400) Production Indifference Curve (Q= 600) (?) Assume that the price of labor is $30 per hour, and the price of capital is $300 per unit. Given these input prices, the least expensive way to produce 200 units of output is to use of capital and hours of labor. Suppose the firm's production indifference curve corresponding to an output of 200 units can be approximated by the smooth curve, labeled "Q=200," on the following graph. Using the green line (triangle symbols), add the lowest budget line that the firm can attain at the given prices for capital and labor. Then use the black point (plus symbol) to identify the least-cost combination of labor and capital that can be used to produce an output level of 200. CAPITAL (Units of capital) 1 Using the green line (triangle symbols), add the lowest budget line that the firm can attain at the given prices for capital and labor. Then use the black point (plus symbol) to identify the least-cost combination of labor and capital that can be used to produce an output level of 200. ? Q=200 0 0 10 20 30 40 50 60 70 80 90 100 LABOR (Hours of labor) + Least Cost Combination Cost-min budget line Suppose a firm has two inputs: capital and labor. The following table shows how much labor the firm needs to produce 200, 400, or 600 units of output if it has 1, 2, 3, or 4 units of capital: Labor Input (Hours) Quantity Produced With 1 Unit of Capital With 2 Units of Capital With 3 Units of Capital With 4 Units of Capital 200 60 30 10 5 400 90 50 35 25 600 100 65 45 30 On the following diagram, plot this firm's production indifference curves for 400 and 600 units of output. Specifically, use the purple points (diamond symbol) to plot the production indifference curve corresponding to 400 units of output; use the green points (triangle symbol) to plot the production indifference curve corresponding to 600 units of output. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Points will snap to the quantities of labor. CAPITAL (Units of capital) Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Points will snap to the quantities of labor. 1 5 0 0 10 20 30 40 50 60 70 80 90 100 LABOR (Hours of labor) Production Indifference Curve (Q= 400) Production Indifference Curve (Q= 600) (?) Assume that the price of labor is $30 per hour, and the price of capital is $300 per unit. Given these input prices, the least expensive way to produce 200 units of output is to use of capital and hours of labor. Suppose the firm's production indifference curve corresponding to an output of 200 units can be approximated by the smooth curve, labeled "Q=200," on the following graph. Using the green line (triangle symbols), add the lowest budget line that the firm can attain at the given prices for capital and labor. Then use the black point (plus symbol) to identify the least-cost combination of labor and capital that can be used to produce an output level of 200. CAPITAL (Units of capital) 1 Using the green line (triangle symbols), add the lowest budget line that the firm can attain at the given prices for capital and labor. Then use the black point (plus symbol) to identify the least-cost combination of labor and capital that can be used to produce an output level of 200. ? Q=200 0 0 10 20 30 40 50 60 70 80 90 100 LABOR (Hours of labor) + Least Cost Combination Cost-min budget line